On January $2,$ Year $4,$ Brady Ltd$.,$ a private company, purchased $80\%$ of the outstanding shares of Partridge Ltd$.$ for $$5,220,000.$ Partridge$$s statement of financial position and the fair values of its identifiable assets and liabilities for that date were as follows:

Carrying Amount Fair Value

Plant and equipment $($net$)$ $ $5,050,000$ $ $5,050,000$

Patents $($net$)1,550,0002,160,000$

Inventory $2,550,0002,860,000$

Accounts receivable $2,050,0002,050,000$

Cash $610,000610,000$

$ $11,810,000$

Ordinary shares $ $2,111,000$

Retained earnings $3,160,000$

$10\%$ bonds payable $3,550,0003,960,000$

Accounts payable $2,989,0002,989,000$

$ $11,810,000$

The patents had a remaining useful life of ten years on the acquisition date.

The bonds were issued on January $1,$ Year $2,$ and mature on December $31,$ Year $13.$ Goodwill impairment losses were as follows:

Year $4$: $$58,000$

Year $6$: $$42,750$

Partridge declared and paid dividends of $$155,000$ in Year $6.$

Brady uses ASPE for reporting purposes. It elected to use the straight$-$line method to amortize any premium or discount on bonds payable.

On December $31,$ Year $6,$ the financial statements of the two companies were as follows:

STATEMENT OF FINANCIAL POSITION

Brady Partridge

Plant and equipment $($net$)$ $ $9,100,000$ $ $6,100,000$

Patents $($net$)810,000$

Investment in Partridge Ltd$.($equity method$)5,586,600$

Inventory $5,700,0002,450,000$

Accounts receivable $1,550,0001,850,000$

Cash $510,000710,000$

$ $22,446,600$ $ $11,920,000$

Ordinary shares $ $5,550,000$ $ $2,111,000$

Retained earnings $6,472,0004,089,000$

Bonds payable $4,550,0003,550,000$

Accounts payable $5,874,6002,170,000$

$ $22,446,600$ $ $11,920,000$

INCOME STATEMENTS

Brady Partridge

Sales $ $10,550,000$ $ $5,550,000$

Equity method income $145,000$

$10,695,0005,550,000$

Cost of goods purchased $7,040,0003,000,000$

Change in inventory $81,000165,000$

Depreciation expense $1,010,000411,000$

Patent amortization expense $210,000$

Interest expense $535,000355,000$

Other expenses $790,000960,000$

Income taxes $710,000205,000$

$10,166,0005,306,000$

Profit $ $529,000$ $ $244,000$

Required:

$($a$)$ Prepare consolidated financial statements on December $31,$ Year $6.($Input all values as positive numbers.$)$