On January 1, Year 5, PET Company acquired 900 ordinary shares of SET Company for $63,000. On this date, the shareholders equity accounts of SET Company were as follows:

Ordinary shares (1,000 no par value shares issued) $20,000

Preferred shares (4,000 no par value shares issued) (Note 1) 40,000

Retained earnings 30,000

$90,000

Note 1: The preferred shares are $1, cumulative, non-participating with a liquidation value of 1.05. They were two years in arrears on January 1, Year 5.

The following are the statements of retained earnings for the two companies for Year 5:

PET SET

Retained earnings, beginning of year $50,000 $30,000

Profit 30,000 22,000

Dividends (25,000) (15,000)

Retained earnings, end of year $55,000 $37,000

Additional information:

• PET uses the cost method to account for its investment in SET.
• Any acquisition differential is allocated to patents with an estimated useful life of six years as at January 1, Year 5. Neither company has any patents recorded on their separate-entity records.

Required:

1. Calculate the Goodwill and Non-Controlling Interest at acquisition.
2. Prepare the amortization schedule of the acquisition differential, and calculate the consolidated net income and NCI for Year 5.