On January 2, Year 4, Brady Ltd., a private company, purchased 80% of the outstanding shares of Partridge Ltd. for $5,720,000. Partridge's statement of financial position and the fair values of its identifiable assets and liabilities for that date were as follows: Plant and equipment (net) Patents (net) Inventory Accounts receivable Carrying Amount $ 5,300,000 1,800,000 2,800,000 2,300,000 660,000 $12,860,000 $ 2,161,000 3,460,000 3,800,000 3,439,000 $12,860,000 Fair Value $5,300,000 2,460,000 3,160,000 2,300,000 660,000 Cash Ordinary shares Retained earnings 10% bonds payable Accounts payable 4,260,000 3,439,000 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: $73,000 Year 6: $56,500 Partridge declared and paid dividends of $125,000 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: Brady $ 9,600,000 Partridge $ 6,600,000 860,000 STATEMENT OF FINANCIAL POSITION Plant and equipment (net) Patents (net) Investment in Partridge Ltd. (equity method) Inventory Accounts receivable Cash Ordinary shares Retained earnings Bonds payable Accounts payable 6,143,600 6,200,000 1,800,000 560,000 $24,303,600 $ 5,800,000 6,522,000 4,800,000 7,181,600 $24,303,600 2,700,000 2,100,000 760,000 $13,020,000 $ 2,161,000 4,539,000 3,800,000 2,520,000 $13,020,000 Partridge $ 5,800,000 INCOME STATEMENTS Brady Sales $ 10,800,000 Equity method income 150,000 10,950,000 Cost of goods purchased 7,090,000 Change in inventory 86,000 Depreciation expense 1,060,000 Patent amortization expense Interest expense 560,000 Other expenses 840,000 Income taxes 760,000 (10,396,000) Profit $ 554,000 5,800,000 3,050,000 190,000 416,000 260,000 380,000 1,010,000 230,000 (5,536,000) $ 264,000 Required: (a) Prepare consolidated financial statements on December 31, Year 6. (Input all values as positive numbers.) Brady Ltd. Consolidated Income Statement for the Year Ended December 31, Year 6 Attributable to: Brady's shareholders Non-controlling interest