On January 1, 2014, Poplar Incorporated purchased 66,500 of the 95,000 outstanding common

shares of Sycamore Limited (a 70% interest) for a cash payment of $700,000. On that date,

Sycamore had share capital of $800,000 and retained earnings of $112,000. Any acquisition

differential was classified as goodwill.

During 2014, Sycamore Limited reported net income of $120,000 earned evenly over the year and

paid dividends of $40,000 on April 1 and an additional $50,000 on October 1.

On July 1, 2014, Poplar purchased an additional 5,000 common shares directly from Sycamore

Limited (increasing the number of shares outstanding to 100,000). The cost of the additional

shares was $50,000.

Poplar accounts for its investment in Sycamore using the cost method and valued the noncontrolling interest in Sycamore on the acquisition date based on its fair value, proportionate to the

amount paid for its controlling interest.

Following are the condensed balance sheets of the two companies at December 31, 2014:

Required:

Prepare a consolidated balance sheet for Poplar and its subsidiary as at December 31, 2014. (Hint:

The acquisition of the additional shares by Poplar did not change the consolidated cash balances as

the money was paid by the parent to the subsidiary.)