On January 1, 2019 Paw Inc, a public company, acquired 90% of the shares of Patrol Corp. for $90,000. The equity of Patrol as at that date was:

Share capital- 20,000 shares $20,000

Retained earnings $50,000

Paw had previously acquired 10% of the shares of Patrol for $10,000. The fair value of this investment as at January 1, 2019 was $19,000.

At the day of acquisition all of the identifiable assets of Patrol were recorded at fair value except for a plant and inventory, whose carrying amounts were $15,000 and $5,000 respectively less than their fair value. All the liabilities were recorded at fair value except the long term debt which had a fair value of $ 88,000, when the carrying value was $100,000. The amortization on the difference in the value is $520 in 2019, $541 in 2020, and $560 in 2021. All of the inventory was subsequently sold during 2019 and the plant had a remaining useful life at the acquisition date of 5 years. The tax rate is 40%.

Patrol had been actively researching a new process, which is part of the reason why Paw acquired the remaining outstanding shares of Patrol. Paw estimated the value of this intangible to be $30,000 and that it would have an indefinite useful life. In 2021 the intangible was impaired to $25,000.

During 2021 Paw had net income of $30,000 and paid dividends of $10,000. During 2021 Patrol had income of $35,000 and paid dividends of $22,000. Patrol paid Paw $25,000 in management fees in 2021.

In 2020 Patrol sold $20,000 of inventory to Paw at a profit of $8,000. One quarter of this inventory was still on Paw's books at year-end 2020. In 2021, Paw sold $60,000 of merchandise to Patrol at a gross profit of 20%. At December 31, 2021, one half of this merchandise was in the subsidiary's inventory.

On January 1, 2019, Paw sold a machine with a NBV of $35,000 to Patrol for $65,000. At that date the machine had a remaining useful life of 4 years.

On January 1, 2019 Paw Inc, a public company, acquired 90% of the shares of Patrol Corp. for $90,000. The equity of Patrol as at that date was:

Share capital- 20,000 shares $20,000

Retained earnings $50,000

Paw had previously acquired 10% of the shares of Patrol for $10,000. The fair value of this investment as at January 1, 2019 was $19,000.

At the day of acquisition all of the identifiable assets of Patrol were recorded at fair value except for a plant and inventory, whose carrying amounts were $15,000 and $5,000 respectively less than their fair value. All the liabilities were recorded at fair value except the long term debt which had a fair value of $ 88,000, when the carrying value was $100,000. The amortization on the difference in the value is $520 in 2019, $541 in 2020, and $560 in 2021. All of the inventory was subsequently sold during 2019 and the plant had a remaining useful life at the acquisition date of 5 years. The tax rate is 40%.

Patrol had been actively researching a new process, which is part of the reason why Paw acquired the remaining outstanding shares of Patrol. Paw estimated the value of this intangible to be $30,000 and that it would have an indefinite useful life. In 2021 the intangible was impaired to $25,000.

During 2021 Paw had net income of $30,000 and paid dividends of $10,000. During 2021 Patrol had income of $35,000 and paid dividends of $22,000. Patrol paid Paw $25,000 in management fees in 2021.

In 2020 Patrol sold $20,000 of inventory to Paw at a profit of $8,000. One quarter of this inventory was still on Paw's books at year-end 2020. In 2021, Paw sold $60,000 of merchandise to Patrol at a gross profit of 20%. At December 31, 2021, one half of this merchandise was in the subsidiary's inventory.

On January 1, 2019, Paw sold a machine with a NBV of $35,000 to Patrol for $65,000. At that date the machine had a remaining useful life of 4 years.

Below are the Statements of Financial Position of Paw and Patrol as at December 31, 2021

	Paw	Patrol
Assets
Current assets	$83,000	$43,000
Long term assets	314,000	195,000
	397,000	238,000
Liabilities
Current liabilities	242,000	48,000
Long term liabilities	80,000	100,000
	322,000	148,000
Equity
Retained Earnings	60,000	70,000
Common shares	15,000	20,000
	75,000	90,000
	397,000	238,000

Required:

Prepare the acquisition analysis at January 1, 2019.

Prepare the fair value adjustment table for the year ended December 31, 2021.

Calculate the adjustments required to the financial statements as at December 31, 2021 for the intragroup transactions.

Prepare the consolidated balance sheet as at December 31, 2021.