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 Fazli'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 Fazll 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: $ $ $ Fazli 874,000 (734,000) 140,000 265,000 140,000 (45,000) 360,000 340,000 $ Cyrus $ 958,000 (698,000) $ 260,000 $ 844,000 260,000 (107,000) $ 997,000 $ 744,000 917,000 444,000 115,000 $ 2,220,000 $ 588,000 997,000 635,000 $ 2,220,000 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 $ 308,000 514,000 167,000 $ 1,329,000 $ 508,000 360,000 461,000 $ 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 "O" wherever required. Negative/Deductible amounts should be indicated by a minus sign. Omit $ sign in your response.) Balance Jan. 1 Year 4 $ Balance Dec. 31 Year 5 $ Changes Year 5 $ Year 4 $ 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.) (1) Cost method Cost Method $ Investment income from Fazli Investment in Fazli $ (11) Equity 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? (11) Equity method? (Omit $ sign in your response.) (i) Cost Method (ii) Equity Method Retained earnings $ $ (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 $