On January 1, Year 4. Grant Corporation bought 8,000 (80%) of the outstanding common shares of Lee Company for $70,000 cash. Lee's shares were trading for $7 per share on the date of acquisition. On that date, Lee had $25,000 of common shares outstanding and $30,000 retained earnings. Also on that date, the carrying amount of each of Lee's identifiable assets and liabilities was equal to its fair value except for the following: Inventory Patent Carrying Amount $50,000 10,000 Fair Value $55,090 20,000 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 Year 7 The following are the separate-entity financial statements of Grant and Lee as at December BALANCE SHEETS At December 31, Year 7 Grant Lee Assets Cash Accounts receivable Inventory Investment in Lee Equipment, net Patent, net $5,000 $ 18,000 185,000 82,000 310,000 100,000 70,000 230,000 205,000 2,000 $800,000 $407,600 Liabilities and Shareholders' Equity Accounts payable Other accrued liabilities Income taxes payable Common shares Retained earnings $ 190,000 $195,000 60,000 50,000 80,000 72,000 170,000 25,000 300,000 65.000 1 of 1 !!! Nex 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 Total Attributable to Grant's shareholders Non-controlling interest Grant Corporation Consolidated Balance Sheet December 31, Year 7 Assets Liabilities and Equity On January 1, Year 4. Grant Corporation bought 8,000 (80%) of the outstanding common shares of Lee Company for $70,000 cash. Lee's shares were trading for $7 per share on the date of acquisition. On that date, Lee had $25,000 of common shares outstanding and $30,000 retained earnings. Also on that date, the carrying amount of each of Lee's identifiable assets and liabilities was equal to its fair value except for the following: Inventory Patent Carrying Amount $50,000 10,000 Fair Value $55,000 20,000 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 Lee as at December 31, Year 7: BALANCE SHEETS At December 31, Year 7 Grant Lee Assets Cash Accounts receivable Inventory Investment in Lee Equipment, net Patent, net $ 5,000 185,000 310,000 70,000 230,000 $ 18,000 82,000 100,000 205,000 2,000 $ 407,000 $800,000 Liabilities and Shareholders' Equity Accounts payable Other accrued liabilities Income taxes payable Common shares Retained earnings $190,000 $ 195,000 60,000 50,000 80,000 72,000 170.000 25,000 300,000 65,000 1 of 1 vu $ INCOME STATEMENT Year ended December 31, Year 7 unt Sales $ 990,000 Cost of goods sold (340,000) Gross margin 560,000 Distribution expense (30,000) Other expenses (180,000) Income tax expense (120,000 Net income $ 230,000 Lee 360,000 (240,000) 120,000 (25,000) (56,000 (16,000 23,000 $ Additional Information The recoverable amount for goodwill was determined to be $10.000 on December 31, Year 7. The goodwill impairment loss occurred in Year 7 Grant's accounts receivable contains $30,000 owing from Lee. Amortization expense is grouped with distribution expenses and impairment losses are grouped with other expenses. Required: (a) Calculate consolidated retained earnings at December 31, Year 7. (Input all values as positive numbers. Omit S sign in your response) Calculation of consolidated retained earnings - Dec 31, Year 7 Retained earnings - Grant Retained earnings - Lee $ Retained earnings on acquisition Increase 5 Required: (a) Calculate consolidated retained earnings at December 31, Year 7 (Input all values as positive numbers. Omit $ sign in y response.) Calculation of consolidated retained earnings Dec 31, Year 7 Retained earnings - Grant Retained earnings - Lee Retained earnings on acquisition Increase Grant's share Less: Changes to acquisition differential to $ $ ces (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 On January 1, Year 4. Grant Corporation bought 8,000 (80%) of the outstanding common shares of Lee Company for $70,000 cash. Lee's shares were trading for $7 per share on the date of acquisition. On that date, Lee had $25,000 of common shares outstanding and $30,000 retained earnings. Also on that date, the carrying amount of each of Lee's identifiable assets and liabilities was equal to its fair value except for the following: Inventory Patent Carrying Amount $50,000 10,000 Fair Value $55,090 20,000 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 Year 7 The following are the separate-entity financial statements of Grant and Lee as at December BALANCE SHEETS At December 31, Year 7 Grant Lee Assets Cash Accounts receivable Inventory Investment in Lee Equipment, net Patent, net $5,000 $ 18,000 185,000 82,000 310,000 100,000 70,000 230,000 205,000 2,000 $800,000 $407,600 Liabilities and Shareholders' Equity Accounts payable Other accrued liabilities Income taxes payable Common shares Retained earnings $ 190,000 $195,000 60,000 50,000 80,000 72,000 170,000 25,000 300,000 65.000 1 of 1 !!! Nex 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 Total Attributable to Grant's shareholders Non-controlling interest Grant Corporation Consolidated Balance Sheet December 31, Year 7 Assets Liabilities and Equity On January 1, Year 4. Grant Corporation bought 8,000 (80%) of the outstanding common shares of Lee Company for $70,000 cash. Lee's shares were trading for $7 per share on the date of acquisition. On that date, Lee had $25,000 of common shares outstanding and $30,000 retained earnings. Also on that date, the carrying amount of each of Lee's identifiable assets and liabilities was equal to its fair value except for the following: Inventory Patent Carrying Amount $50,000 10,000 Fair Value $55,000 20,000 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 Lee as at December 31, Year 7: BALANCE SHEETS At December 31, Year 7 Grant Lee Assets Cash Accounts receivable Inventory Investment in Lee Equipment, net Patent, net $ 5,000 185,000 310,000 70,000 230,000 $ 18,000 82,000 100,000 205,000 2,000 $ 407,000 $800,000 Liabilities and Shareholders' Equity Accounts payable Other accrued liabilities Income taxes payable Common shares Retained earnings $190,000 $ 195,000 60,000 50,000 80,000 72,000 170.000 25,000 300,000 65,000 1 of 1 vu $ INCOME STATEMENT Year ended December 31, Year 7 unt Sales $ 990,000 Cost of goods sold (340,000) Gross margin 560,000 Distribution expense (30,000) Other expenses (180,000) Income tax expense (120,000 Net income $ 230,000 Lee 360,000 (240,000) 120,000 (25,000) (56,000 (16,000 23,000 $ Additional Information The recoverable amount for goodwill was determined to be $10.000 on December 31, Year 7. The goodwill impairment loss occurred in Year 7 Grant's accounts receivable contains $30,000 owing from Lee. Amortization expense is grouped with distribution expenses and impairment losses are grouped with other expenses. Required: (a) Calculate consolidated retained earnings at December 31, Year 7. (Input all values as positive numbers. Omit S sign in your response) Calculation of consolidated retained earnings - Dec 31, Year 7 Retained earnings - Grant Retained earnings - Lee $ Retained earnings on acquisition Increase 5 Required: (a) Calculate consolidated retained earnings at December 31, Year 7 (Input all values as positive numbers. Omit $ sign in y response.) Calculation of consolidated retained earnings Dec 31, Year 7 Retained earnings - Grant Retained earnings - Lee Retained earnings on acquisition Increase Grant's share Less: Changes to acquisition differential to $ $ ces (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