On January 1, Year 4, Cyrus Inc. paid $916,000 in cash to acquire all of the ordinary shares of Fazli Company. On that date, Fazli's retained earnings were $202,000. All of Fazli's assets and liabilities had fair values equal to carrying amounts except for an investment in bonds, which was worth $13,024 more than carrying amount and will mature on December 31, Year 8. The recoverable amount for goodwill was $190,000 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 $127,000 and declared no dividends. In Year 4, Fazli reported net income of $92,000 and paid a $42,000 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 $2,408 in Year 4 and $2,504 in Year 5. The financial statements for Cyrus and Fazli for the year ended December 31, Year 5, were as follows: $ $ $ $ $ Cyrus 948,000 (690,000) 258,000 834,000 258,000 (106,000) 986,000 734,000 Fazli 864,000 (726,000) 138,000 260,000 138,000 (44,000) 354,000 332,000 $ $ Revenues and investment income Expenses Profit Retained earnings, 1/1/Year 5 Profit Dividends paid Retained earnings, 12/31/Year 5 Equipment (net) Investment in Fazli Investment in bonds Receivables and inventory Cash Total assets Ordinary shares Retained earnings Liabilities Total equities and liabilities 916,000 0 434,000 108,000 $ 2,192,000 $ 578,000 986,000 628,000 $ 2,192,000 306,000 504,000 162,000 $ 1,304,000 $ 500,000 354,000 450,000 $ 1,304,000 Required: (a) Prepare a schedule of changes to the acquisition differential for Years 4 and 5. (Leave no cells blank - be certain to enter "O" wherever required. Negative/Deductible amounts should be indicated by a minus sign. Omit $ sign in your response.) Balance Jan. 1 Balance Dec. 31 Year 5 $ Changes Year 4 Year 5 $ $ Year 4 $ Investment in bonds Goodwill $ $ $ $ (f) What is Cyrus's January 1, Year 5, retained earnings account balance on its separate entity financial statements assuming Cyrus accounts for its investment in Fazli using the: (1) Cost method? (ii) Equity method? (Omit $ sign in your response.) Retained earnings (i) Cost Method (ii) Equity Method DATA (g) What are consolidated retained earnings at January 1, Year 5, assuming Cyrus accounts for its investment in Fazli using the (1) Cost method? (ii) Equity method? (Omit $ sign in your response.) Retained earnings $ (i) Cost Method (ii) Equity Method DA GA On January 1, Year 4, Cyrus Inc. paid $916,000 in cash to acquire all of the ordinary shares of Fazli Company. On that date, Fazli's retained earnings were $202,000. All of Fazli's assets and liabilities had fair values equal to carrying amounts except for an investment in bonds, which was worth $13,024 more than carrying amount and will mature on December 31, Year 8. The recoverable amount for goodwill was $190,000 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 $127,000 and declared no dividends. In Year 4, Fazli reported net income of $92,000 and paid a $42,000 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 $2,408 in Year 4 and $2,504 in Year 5. The financial statements for Cyrus and Fazli for the year ended December 31, Year 5, were as follows: $ $ $ $ $ Cyrus 948,000 (690,000) 258,000 834,000 258,000 (106,000) 986,000 734,000 Fazli 864,000 (726,000) 138,000 260,000 138,000 (44,000) 354,000 332,000 $ $ Revenues and investment income Expenses Profit Retained earnings, 1/1/Year 5 Profit Dividends paid Retained earnings, 12/31/Year 5 Equipment (net) Investment in Fazli Investment in bonds Receivables and inventory Cash Total assets Ordinary shares Retained earnings Liabilities Total equities and liabilities 916,000 0 434,000 108,000 $ 2,192,000 $ 578,000 986,000 628,000 $ 2,192,000 306,000 504,000 162,000 $ 1,304,000 $ 500,000 354,000 450,000 $ 1,304,000 Required: (a) Prepare a schedule of changes to the acquisition differential for Years 4 and 5. (Leave no cells blank - be certain to enter "O" wherever required. Negative/Deductible amounts should be indicated by a minus sign. Omit $ sign in your response.) Balance Jan. 1 Balance Dec. 31 Year 5 $ Changes Year 4 Year 5 $ $ Year 4 $ Investment in bonds Goodwill $ $ $ $ (f) What is Cyrus's January 1, Year 5, retained earnings account balance on its separate entity financial statements assuming Cyrus accounts for its investment in Fazli using the: (1) Cost method? (ii) Equity method? (Omit $ sign in your response.) Retained earnings (i) Cost Method (ii) Equity Method DATA (g) What are consolidated retained earnings at January 1, Year 5, assuming Cyrus accounts for its investment in Fazli using the (1) Cost method? (ii) Equity method? (Omit $ sign in your response.) Retained earnings $ (i) Cost Method (ii) Equity Method DA GA