On January 1, Year 4, Cyrus Inc. paid $914,000 in cash to acquire all of the ordinary shares of Fazli Company. On that date, Fazlis retained earnings were $200,000. All of Fazlis assets and liabilities had fair values equal to carrying amounts except for an investment in bonds, which was worth $12,988 more than carrying amount and will mature on December 31, Year 8. The recoverable amount for goodwill was $200,000 at the end of Years 4 and 5. In Year 4, Cyrus reported net income from its own operations (exclusive of any income from Fazli) of $125,000 and declared no dividends. In Year 4, Fazli reported net income of $80,000 and paid a $30,000 cash dividend. Cyrus uses the cost method to report its investment in Fazli and uses the effective interest method to amortize premiums or discounts on investment in bonds. The amortization of the acquisition differential pertaining to the investment in bonds was $2,351 in Year 4 and $2,468 in Year 5. The financial statements for Cyrus and Fazli for the year ended December 31, Year 5, were as follows:

	Cyrus				Fazli
Revenues and investment income	$	928,000			$	844,000
Expenses		(674,000	)			(710,000	)
Profit	$	254,000			$	134,000
Retained earnings, 1/1/Year 5	$	814,000			$	250,000
Profit		254,000				134,000
Dividends paid		(104,000	)			(42,000	)
Retained earnings, 12/31/Year 5	$	964,000			$	342,000
Equipment (net)	$	714,000			$	314,000
Investment in Fazli		914,000				0
Investment in bonds		0				300,000
Receivables and inventory		414,000				484,000
Cash		94,000				152,000
Total assets	$	2,136,000			$	1,250,000
Ordinary shares	$	558,000			$	484,000
Retained earnings		964,000				342,000
Liabilities		614,000				424,000
Total equities and liabilities	$	2,136,000			$	1,250,000

Required:

(a) Prepare a schedule of changes to the acquisition differential for Years 4 and 5. (Leave no cells blank - be certain to enter "0" wherever required. Omit $ sign in your response. Negative/Deductible amounts should be indicated by a minus sign.)

	Balance			Balance
	Jan. 1	Changes		Dec. 31
	Year 4	Year 4	Year 5	Year 5
Investment in bonds	$	$	$	$
Goodwill
	$	$	$	$

(b) Calculate investment in bonds and goodwill for the consolidated balance sheet at the end of Year 5. (Omit $ sign in your response.)

Investment in bonds	$
Goodwill	$

(c) Calculate investment income from Fazli and investment in Fazli account balances for Cyruss separate entity financial statements for Year 5, assuming Cyrus uses the: (Omit $ sign in your response.)

(i) Cost method

Cost Method
Investment income from Fazli	$
Investment in Fazli	$

(ii) Equity method

	Equity Method
Investment income from Fazli	$
Investment in Fazli	$

(f) What is Cyruss January 1, Year 5, retained earnings account balance on its separate entity financial statements assuming Cyrus accounts for its investment in Fazli using the:

(i) Cost method?

(ii) Equity method?

(Omit $ sign in your response.)

		Retained earnings
(i)	Cost Method	$
(ii)	Equity Method	$

(g) What are consolidated retained earnings at January 1, Year 5, assuming Cyrus accounts for its investment in Fazli using the:

(i) Cost method?

(ii) Equity method?

(Omit $ sign in your response.)

(Omit $ sign in your response.)

		Retained earnings
(i)	Cost Method	$
(ii)	Equity Method	$

(g) What are consolidated retained earnings at January 1, Year 5, assuming Cyrus accounts for its investment in Fazli using the:

(i) Cost method?

(ii) Equity method?

(Omit $ sign in your response.)

		Retained earnings
(i)	Cost Method	$
(ii)	Equity Method	$