On January 1, Year 4, Grant Corporation bought 5,000 (80%) of the outstanding common shares of Devy Company for $43,750 cash Devy's shares were trading for $7 per share on the date of acquisition. On that date, Devy had $15,625 of common shares outstanding and $18,750 retained earnings. Also on that date, the carrying amount of each of Devy's identifiable assets and liabilities was equal to Its fair value except for the following: Inventory Patent Carrying Amount $31,250 6,250 Fair Value $34,375 12,500 4 The patent had an estimated useful life of five years at January 1, Year 4, and the entire inventory was sold during Year 4. Grant uses the cost method to account for its investment. The following are the separate-entity financial statements of Grant and Devy as at December 31, Year 7. Assets Cash Accounts receivable Inventory BALANCE SHEETS At December 31, Year 7 Grant Devy $ 3,125 $ 11,250 115,625 51,250 193,750 62,500 Investment in Devy Equipment (net) Patent (net) Liabilities and Shareholders' Equity Accounts payable Other accrued liabilities Income taxes Davable 43,750 143,750 128,125 1,250 $500,000 $254,375 $118,750 $121,875 37,500 50.000 31,250 45.000 Liabilities and Shareholders' Equity Accounts payable Other accrued liabilities Income taxes payable Common shares Retained earnings, INCOME STATEMENT Year ended December 31, Year 7 Sales Cost of goods sold Gross margin Distribution expense Other expenses Income tax expense Net income $118,750 $121,875) 37,500 31,250 50,000 45,000 106,250 15,625 187,500 40,625 $500,000 $254,375 Grant Devy 562,500 S 225,000 (212,500) (150,000) 350,000 75,000 (18,750). (15,625) (112,500) (35,000) (75,000) (10,000) 143,750 14,375 Additional Information. The recoverable amount for goodwill was determined to be $6,250 on December 31, Year 7. The goodwill impairment loss occurred In Year 7. Grant's accounts receivable contains $18,750 owing from Devy Amortization expense is grouped with distribution expenses and impairment losses are grouped with other expenses Required: Check my Activate Windows Required: (a) Calculate consolidated retained earnings at December 31, Year 7. (Input all values as positive numbers. Omit $ and % sign in your response.) Retained earnings Grant Calculation of consolidated retained earnings Dec 31, Year 7 Retained earnings - Devy Retained earnings on acquisition Increase Grant's share Less: Changes to acquisition differential (b) Prepare consolidated financial statements for Year 7. (Input all values as positive numbers.) Grant Corporation Consolidated Income Statement Year ended December 31, Year 7 Gross margin Score 4. Activate (b) Prepare consolidated financial statements for Year 7. (Input all values as positive numbers.) Grant Corporation Consolidated Income Statement Year ended December 31, Year 7 Gross margin Total Attributable to: Grant's shareholders Non-controlling interest Grant Corporation Consolidated Balance Sheet - December 31, Year 7 Assets Liabilities and Equity