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 $3,480,000, and retained earnings of $2,110,000. When acquired, Devine had inventories with fair values $90,000 less than carrying amount, a parcel of land with a fair value $210,000 greater than the carrying amount, and equipment with a fair value $210,000 less than carrying amount. There were also internally generated patents with an estimated market value of $410,000 and a five-year remaining life. A long-term liability had a market value $110,000 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 $510,000 at the date of acquisition.

The year 11 financial statements for Vine and Devine were as follows:

INCOME STATEMENTS
For year ending December 31, Year 11
(in thousands of dollars)
	Vine				Devine
Sales	$	11,800			$	3,200
Dividends, investment income and gains		600				1,200
Total income		12,400				4,400
Cost of goods sold		8,300				1,700
Other expenses		500				500
Income taxes		200				200
Total expenses		(9,000	)			(2,400	)
Profit	$	3,400			$	2,000

STATEMENTS OF FINANCIAL POSITION
December 31, Year 11
(in thousands of dollars)
	Vine				Devine
Land	$	6,000			$	2,500
Plant and equipment		19,000				12,000
Accumulated depreciation		(5,600	)			(4,800	)
Investment in Devine, cost		5,010
Inventories		4,800				2,600
Cash and current receivables		1,120				500
Total assets	$	30,330			$	12,800
Ordinary shares	$	10,000			$	3,480
Retained earnings		11,800				6,800
Long-term liabilities		6,800				1,300
Deferred income taxes		400				100
Current liabilities		1,330				1,120
Total equity and liabilities	$	30,330			$	12,800

Additional Information

• 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 $410,000.
• Sales of finished goods from Vine to Devine totalled $1,010,000 in Year 10 and $2,010,000 in Year 11. These sales were priced to provide a gross profit margin on selling price of 33 % to the Vine Company. Devines December 31, Year 10, inventory contained $303,000 of these sales; December 31, Year 11, inventory contained $603,000 of these sales.
• Sales of finished goods from Devine to Vine were $810,000 in Year 10 and $1,210,000 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 $110,000 of these sales; the December 31, Year 11, inventory contained $510,000 of these sales.
• Vines investment in Devines account is carried in accordance with the cost method and includes advances to Devine of $210,000, 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.

Required:

(a) The allocation of the acquisition cost at acquisition and the related changes to acquisition differential schedule. (Leave no cells blank - be certain to enter "0" wherever required. Enter your answers in dollars, not in thousands of dollars. Input all values as positive numbers. Do not round gross profit percentage for intermediate computations. Omit $ sign in your response.)

Acquisition cost Allocation
Acquisition January 1, Year 7
Cost					$
Implied value of 100% investment
Current Assets:Ordinary Shares		$
Retained Earnings
Acquisition differential					$

Allocation:			Life
Inventory		Cr	1
Land		Dr
Equipment		Cr	10
Patents		Dr	5
Long - term Liability		Cr	4
Subtotal		Dr
Balance: Goodwill		Dr
		Dr

Changes to Acquisition Differential Table:
	Allocation		Life	Changes				Balance
				YR 7 - YR 10		YR 11		Dec. 3, YR 11
Inventory		Cr	1		Dr
Land		Dr							Dr
Equipment		Cr	10		Dr		Dr		Cr
Patents		Dr	5		Cr		Cr
Long - term liability		Cr	4		Dr
Goodwill		Dr							Dr
		Dr			Cr		Cr		Dr

(b) Prepare a consolidated income statement with expenses classified by function. (Enter your answers in dollars, not in thousands of dollars. Do not round gross profit percentage for intermediate computations. Input all values as positive numbers.)

(c) Calculate consolidated retained earnings at December 31, Year 11. (Enter your answer in dollars, not in thousands of dollars. Do not round gross profit percentage for intermediate computations. Omit $ sign in your response.)

Consolidated retained earnings $

(d) Prepare a consolidated statement of financial position for Vine Company at December 31, Year 11. (Negative amounts should be indicated by a minus sign. Enter your answers in dollars, not in thousands of dollars. Do not round gross profit percentage for intermediate computations.)