On January 2, Year 4, Brady Ltd., a private company, purchased 80% of the outstanding shares of Partridge Ltd. for $6,120,000. Partridges 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)	$	5,500,000		$	5,500,000
Patents (net)		2,000,000			2,700,000
Inventory		3,000,000			3,400,000
Accounts receivable		2,500,000			2,500,000
Cash		700,000			700,000
	$	13,700,000
Ordinary shares	$	2,201,000
Retained earnings		3,700,000
10% bonds payable		4,000,000			4,500,000
Accounts payable		3,799,000			3,799,000
	$	13,700,000

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: $85,000
• Year 6: $67,500

Partridge declared and paid dividends of $145,000 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)	$	10,000,000		$	7,000,000
Patents (net)					900,000
Investment in Partridge Ltd. (equity method)		6,589,200
Inventory		6,600,000			2,900,000
Accounts receivable		2,000,000			2,300,000
Cash		600,000			800,000
	$	25,789,200		$	13,900,000
Ordinary shares	$	6,000,000		$	2,201,000
Retained earnings		6,562,000			4,899,000
Bonds payable		5,000,000			4,000,000
Accounts payable		8,227,200			2,800,000
	$	25,789,200		$	13,900,000

INCOME STATEMENTS
		Brady			Partridge
Sales	$	11,000,000		$	6,000,000
Equity method income		154,000
		11,154,000			6,000,000
Cost of goods purchased		7,130,000			3,090,000
Change in inventory		90,000			210,000
Depreciation expense		1,100,000			420,000
Patent amortization expense					300,000
Interest expense		580,000			400,000
Other expenses		880,000			1,050,000
Income taxes		800,000			250,000
		(10,580,000)			(5,720,000)
Profit	$	574,000		$	280,000

Required:

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

(b) Now assume that Brady uses the cost method to account for its investment in Partridge. Which items on Brady's separate-entity financial statements would have amounts different from those shown. Compute the cost method balances of these items.

(c) Calculate the current ratio, debt-to-equity ratio, and return on total shareholders equity for Bradys Year 6 financial statements assuming that the (Round your intermediate computations to nearest whole dollar value. Round current ratio and debt to equity ratio to 2 decimal places and return on equity to 1 decimal place.)

(i) Equity method was used to report its investment in Partridge;

	Equity
Current ratio
Debt-to-equity ratio
Return on equity		%

(ii) Cost method was used to report its investment in Partridge;

	Cost
Current ratio
Debt-to-equity ratio
Return on equity		%

(iii) Consolidated statements were used to report the business combination with Partridge.

	Consolidation
Current ratio
Debt-to-equity ratio
Return on equity		%

(d) Not available in Connect.

(e) Prepare the consolidated financial statements using the worksheet approach. (Input all amounts as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Leave no cells blank - be certain to enter "0" wherever required. Omit $ sign in your response.)