On January 1, Year 2, Page Company acquired 70% of the outstanding common shares of Sage Ltd. for $45,500 in cash. On that date, Sage had $20,000 in common shares outstanding and $20,000 in retained earnings. At the time of the acquisition, the book value of each of Sages assets was equal to its fair value except for the following:

The buildings and equipment had a remaining useful life of 10 years on the acquisition date, and the inventory on hand at the time of the purchase was sold in Year 2. Any excess paid over the fair value was for Sages good reputation in the herb industry, which Page set up as goodwill. Following are the financial statements for Page and Sage at December 31, Year 9.

During Year 8 and Year 9, Sage sold merchandise to Page at a price that provides it with a gross profit of 50%. The Year 9 sale was $10,000. Pages December 31, Year 9, inventory contained $2000 plus the last digit of your student number times 100 worth of these purchases. For example, if your student number is T00987246, then 6 is the last digit, and 100 times 6 is $600. Therefore, $2600 of the merchandise would be remaining. The December 31, Year 8, inventory of Page contained $1000 plus the last digit of your student number times 100 worth of these purchases. For example, if your student number is T00987246, then 6 is the last digit, and 100 times 6 is $600. The unsold amount would then be $1600. At the end of Year 9, Page owed Sage $500 for merchandise inventory purchased on account. This liability is non-interest bearing.

On December 31, Year 6, Page sold equipment having a cost of $5000 and accumulated depreciation of $1000 to Sage for $5000 plus the last digit of your student number times 100. For example, if your student number is T00987246, then 6 is the last digit, and 100 times 6 is $600. The sale would then be for $5600. The remaining useful life of the equipment at the time of the sale was 10 years.

In Year 5, the goodwill impairment test resulted in a $5000 loss, and for Year 9, goodwill was further impaired by $714.

Neither company paid dividends during Year 9. Both companies have a 40% tax rate.

Page accounts for Sage using the FVE and cost methods.

Required:

1. Prepare preliminary calculations as noted below:

   1. Calculation of goodwill using fair values

   2. Calculation and allocation of acquisition differential and calculation of goodwill, and calculation of initial NCI

   3. Acquisition differential amortization and goodwill impairment table

   4. Table of realized and unrealized intercompany inventory profits

   5. Table of intercompany profits in capital assets and other eliminations

   6. Calculation of consolidated net income and NCI-I/S

   7. Calculation of consolidated beginning of Year 9 retained earnings

   8. Calculation of end of Year 9 NCI-B/S

2. Prepare Pages consolidated income statement for Year 9 and the consolidated statement of financial position for December 31, Year 9.

Statements of Income and Retained Earnings Year Ended December 31, Year 9 Separate Entity Balance Sheets December 31, Year 9 \begin{tabular}{rr} PAGE & \multicolumn{1}{l}{ SAGE } \\ $29,500 & $10,000 \\ 60,000 & 20,000 \\ 45,000 & 30,000 \\ 45,500 & \\ 90,000 & 100,000 \\ (20,000) & (50,000) \\ \hline 250,000 & $110,000 \\ \hline \end{tabular} Liabilities Current liabilities Deferred tax liability Shareholders' equity Ordinary shares Retained earnings \begin{tabular}{rrr} $40,000 & $25,000 \\ 10,000 & & 5,000 \\ \hline$50,000 & & $30,000 \\ \hline \end{tabular} Book value Fair value Inventory $20,000$60,000$25,000$60,000 Buildings and equipment ($10,000)