On January 1, Year 4, Cyrus Inc. paid $917,000 in cash to acquire all of the ordinary shares of Fazli Company. On that date, Fazli's retained earnings were $203,000. All of Fazil's assets and liabilities had fair values equal to carrying amounts except for an Investment In bonds, which was worth $13,036 more than carrying amount and will mature on December 31, Year 8. The recoverable amount for goodwill was $180,000 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 $128,000 and declared no dividends. In Year 4, Fazli reported net income of $93,000 and paid a $43,000 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 $2,427 in Year 4 and $2,516 in Year 5. The financial statements for Cyrus and Fazli for the year ended December 31, Year 5, were as follows: Revenues and investment income Expenses $ Cyrus 958,000 (698,000) $ Fazli 874,000 (734,000) Profit $ 260,000 $ 140,000 Retained earnings, 1/1/Year 5 Profit $ 844,000 $ 265,000 260,000 140,000 Dividends paid (107,000) (45,000) Retained earnings, 12/31/Year 5 $ 997,000 $ 360,000 Equipment (net) $ 744,000 $ 340,000 Investment in Fazli 917,000 0 Investment in bonds 0 308,000 Receivables and inventory Cash 444,000 115,000 514,000 167,000 Total assets $ 2,220,000 $ 1,329,000 Ordinary shares Retained earnings Liabilities Total equities and liabilities $ 588,000 997,000 635,000 $ 508,000 360,000 461,000 $ 2,220,000 $ 1,329,000 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. Negative/Deductible amounts should be indicated by a minus sign. Omit $ sign in your response.) Balance Jan. 1 Changes Year 4 Year 4 Year 5 Balance Dec. 31 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 Cyrus's separate entity financial statements for Year 5, assuming Cyrus uses the: (Omit $ sign in your response.) (I) Cost method Investment income from Fazli Investment in Fazli (II) Equity method Cost Method $ $ Equity Method Investment income from Fazli $ Investment in Fazli $ (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 (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 $