On January 1, Year 7, the Vine Company purchased 60,000 of the 80,000 ordinary shares of the Devine Company for $80 per share. On that date, Devine had ordinary shares of $3,580,000, and retained earnings of $2,020,000. When acquired, Devine had inventories with fair values $100,000 less than carrying amount, a parcel of land with a fair value $120,000 greater than the carrying amount, and equipment with a fair value $200,000 less than carrying amount. There were also internally generated patents with an estimated market value of $450,000 and a five-year remaining life. A long-term liability had a market value $150,000 greater than carrying amount; this liability was paid off December 31, Year 10. All other identifiable assets and liabilities of Devine had fair values equal to their carrying amounts. Devines accumulated depreciation on the plant and equipment was $420,000 at the date of acquisition. At the acquisition date, the equipment had an expected remaining useful life of ten years. Both companies use the straight-line method for all depreciation and amortization calculations and the FIFO inventory cost flow assumption. Assume a 40% income tax rate on all applicable items and that there were no impairment losses for goodwill. On September 1, Year 11, Devine sold a parcel of land to Vine and recorded a total non-operating gain of $320,000. Sales of finished goods from Vine to Devine totalled $920,000 in Year 10 and $1,920,000 in Year 11. These sales were priced to provide a gross profit margin on selling price of 33 1/3% to the Vine Company. Devines December 31, Year 10, inventory contained $276,000 of these sales; December 31, Year 11, inventory contained $576,000 of these sales. Sales of finished goods from Devine to Vine were $720,000 in Year 10 and $1,120,000 in Year 11. These sales were priced to provide a gross profit margin on selling price of 40% to the Devine Company. Vines December 31, Year 10, inventory contained $20,000 of these sales; the December 31, Year 11, inventory contained $420,000 of these sales. Vine's investment in Devine's account is carried in accordance with the cost method and includes advances to Devine of $120,000, which are also included in current liabilities. There are no intercompany amounts other than those noted, except for the dividends of $500,000 (total amount) declared and paid by Devine. INCOME STATEMENTS For year ending December 31, Year 11 (in thousands of dollars) Vine Sales $ 13,600 Dividends, investment income, and gains 2,400 Total income 16,000 Cost of goods sold 11,000 Other expenses 500 Income taxes 200 Total expenses 11,700 Profit $ 4,300 Devine $ 4,300 3,000 7,300 2,800 500 200 3,500 $ 3,800 STATEMENTS OF FINANCIAL POSITION December 31, Year 11 (in thousands of dollars) Cash and current receivables Inventories Investment in Devine, cost Plant and equipment Accumulated depreciation Land Total assets Vine $ 2,220 2,800 4,920 17,000 (7,600) 6,000 $ 25,340 Devine $ 3,700 1,000 0 10,000 (6,800) 2,500 $ 10,400 Current liabilities Deferred income taxes Long-term liabilities Ordinary shares Retained earnings Total equity and liabilities $ 740 3,000 1,200 10,000 10,400 $ 25,340 $ 120 100 500 3,580 6,100 $ 10,400 Instructions: Management has asked you to determine the amounts to prepare on the financial statements which will be provided to the external users. Management will not tolerate errors in the numbers that you provide or formatting errors as these numbers will be directly inputted into the financial statements. Enter all numbers without dollar signs. Round numbers to the nearest whole dollar, do not enter any decimals in your number. Use commas properly. Do not show numbers such as expenses and dividends as negative. If the amount is zero, enter 0, do not leave any answers blank. For example, a properly formatted number is 125,250. Numbers incorrectly formatted with not result in any marks. Part A Determine the amount of goodwill at the acquisition date. Part B. Determine the following numbers from the consolidated income statement for the year ending December 31, Year 11 Sales AJ Dividend, investment income, and gains Cost of goods sold AJ Other expenses Income tax expense Profit Non-controlling interest A Part C Calculate the consolidated retained earnings at December 31, Year 11. The consolidated retained earnings is AJ Part D Determine the following numbers from the consolidated balance sheet at December 31, Year 11 Cash and current receivables Inventories AD Deferred income tax asset AJ Goodwill Plant and equipment A Accumulated depreciation AJ Land AJ Current liabilities AJ Deferred tax liability A Long-term liabilities AJ Ordinary shares Non-controlling interest A/