On January 1, Year 1, Liepewan Corporation (LC) purchased 180,000 shares (out of 300,000 shares outstanding) of Mertenika Corporation (MC) stock for $20 per share. Shortly after the acquisition date MC shares were trading at $19 per share. At the acquisition date, Mertenikas book value is $4,000,000. Mertenikas assets with differences between fair value and book value are shown below. MC Accounts with Fair Value/Book Value differences on 1/1/Year 1 For internal reporting purposes, Liepewan Corporation now uses the initial value method to account for its investment in Mertenika in Year 5. Using the information on income and dividends in the table below complete the consolidated financial statements for Liepewan Corporation on the provided worksheet for the year ending 12/31/Year 5. Income, dividends, and retained earnings figures for Mertenika Corporation for the years 1 through 5 are shown below. Mertenika Dividends Increase in Ending Year Net Income Paid Book Value Retained Earnings 1 700,000 400,000 300,000 2,000,000 2 750,000 400,000 350,000 2,350,000 3 800,000 450,000 350,000 2,700,000 4 775,000 475,000 300,000 3,000,000 5 800,000 500,000 300,000 3,300,000 $3,825,000 2,225,000 1,600,000 Book Value Fair Value Difference Land 600,000 750,000 150,000 PPE (8-year life) 2,150,000 2,550,000 400,000 Copyrights (22-year life) 0 550,000 550,000 Mertenikas balance in Notes Payable includes $42,000 that is a short-term loan from LC that is to be repaid in June, Year 2. For internal reporting purposes, Liepewan Corporation uses the partial equity method to account for this investment. Complete the consolidated financial statements for Liepewan Corporation on the provided worksheet for the year ending 12/31/Year 1. Consolidation Worksheet 12/31/Year 1 Liepewan Partial Equity Method Accounts Liepewan Mertenika Debit Credit Noncontrol Int Totals Revenues (4,580,000) (2,470,000) Expenses 3,000,000 1,500,000 Depreciation & Amort. Expense 800,000 270,000 Investee Income (420,000) 0 Net Income (1,200,000) (700,000) Noncontrolling Int NI Controlling Interest NI Retained Earnings 1/1 (8,900,000) (1,700,000) Net Income (1,200,000) (700,000) Dividends declared 700,000 400,000 Retained earnings 12/31 (9,400,000) (2,000,000) Balance Sheet Current Assets 720,000 1,500,000 Investment in Mertenika 3,780,000 0 PPE (net) (8-years) 7,500,000 2,500,000 Copyright (22-years) 0 0 Goodwill 0 0 Land 2,300,000 600,000 Total Assets 14,300,000 4,600,000 Accounts Payable (300,000) (100,000) Notes Payable 0 (200,000) Noncontrol Interest 1/1 Noncontrol Interest 12/31 Common Stock (100,000) (300,000) Additional Paid-in capital (4,500,000) (2,000,000) Retained earnings (9,400,000) (2,000,000) Total liabilities and equity (14,300,000) (4,600,000)