On January 1, 2016, Barley Corp. (a publicly-traded Canadian company) purchased 75% of the outstanding common shares in Wheat Ltd. for cash of 4,000,000. At the time, Wheat had 600,000 common shares outstanding with a book value of $1,200,000. Wheats retained earnings on the date of acquisition were $3,000,000. Barley reviewed Wheats balance sheet, and concluded:

• Wheats accounts receivables were overstated by $15,000.
• Some of Wheats inventory had a fair value $30,000 more than what was reported on Wheats balance sheet.
• Some of Wheats equipment had a fair market value $32,000 more than the carrying value on Wheat books. The equipment had an estimated remaining useful life of 15 years on the date of acquisition.
• The book value of Wheats land was $200,000 less than fair market value.

Following are the financial statements for Barley and Wheat as at December 31, 2022:

ADDITIONAL INFORMATION:

• Barley tested the goodwill on its books annually for impairment. The impairment testing revealed a $15,000 impairment of goodwill in 2020 and a further loss of $45,000 in 2021. The 2022 impairment test revealed a $20,000 decline in value of goodwill.
• Both companies depreciated all property, plant, and equipment using the straight-line method, and both companies used the FIFO inventory flow assumption to value inventories. Both companies were subject to a 25% income tax rate.
• Barley declared and paid dividends of $65,000 during 2022. Wheat declared dividends of $100,000 during 2022, but as at December 31, 2022, Wheat had not yet paid the dividends. The unpaid dividends were included in Barleys accounts receivable balance on December 31, 2022.
• Wheats December 31, 2021 inventory included product purchased from Barley at a $20,000 gross margin. Barleys inventory at the start of 2022 contained no inventory purchased from Wheat.
• During 2022, Barley recorded sales to Wheat of $800,000. The cost of this merchandise was $600,000. Wheat owed Barley $130,000 for these purchases at December 31, 2022. During the 2022 fiscal year, Wheat resold 75% of this product to other customers.
• Wheat sold product costing $1,900,000 to Barley for $2,400,000 during 2022. At December 31, 2022, 20% of the merchandise was still in Barleys inventory, and Barley still owed Wheat $250,000 for the purchases.
• Wheat purchased some brand-new manufacturing equipment on January 1, 2014, for $150,000. At the time of purchase, Wheat anticipated that the equipment would have a useful life of 12 years, after which time it would be worthless. Wheat sold the equipment to Wheat for $81,000 on January 1, 2020. No changes to the anticipated useful life or residual value were made at the time of the sale to Barley.
• On July 1, 2022, Barley sold a plot of land to Wheat. The land originally cost Barley $700,000, and was sold to Wheat for $800,000. Wheat still owned the land as at December 31, 2022.

Required:

Prepare a consolidated income statement and a consolidated balance sheet for Barley Corporation for the year ended December 31, 2022. All calculations must be shown in an orderly manner, including totals for each account balance, to obtain marks.