On January 2 Year 4, Brady Ltd., a private company purchased 80% of the outstanding shares of Partridge Ltd. for $4.820.000. Partridge's statement of financial position and the fair values of its Identifiable assets and liabilities for that date were as follows: Plant and equipent (net) Patents (net) Inventory Accounts receivable Fair Value $4,850,000 1,920,000 2,620,880 1,850,000 570,880 Cash Carrying Amount $ 4,85e,eee 1,350, eee 2,350. eee 1,85e,eee 570.ece $10,978, eee $ 2,071,eee 2,929, eee 3,350,000 2,629,eee $18,978,eee Ordinary shares Retained earnings 1ex bonds payable Accounts payable 3,720,000 2,629,000 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: $46,000 Year 6: $31.750 Partridge declared and paid dividends of $135.000 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. Partridge $ 5,7eeeee 770,eee On December 31, Year 6, the financial statements of the two companies were as follows: STATEMENT OF FINANCIAL POSITION Brady Plant and equipment (net) $ 8,7ee,eee Patents (net) Investment in Partridge Ltd. (equity method) 5,141,eee Inventory 5,300,eee Accounts receivable 1,350,000 Cash 478,eee $28,961,000 Ordinary shares $ 5,358,eee Retained earnings 6,432,eee Bonds payable 4,350, eee Accounts payable 4,829,800 $28,961,000 2,250,eee 1.650.000 678,eee $11,848,eee $ 2,671,eee 3,729,eee 3,358,eee 1,890.ece $11,040,eee Partridge $5,350,000 INCOME STATEMENTS Brady Sales $18,350,00 Equity method income 141,880 18,491,080 Cost of goods purchased 7,080, ee Change in inventory 77,880 Depreciation expense 970, cee Patent amortization expense Interest expense 515,880 Other expenses 750,880 Income taxes 670,000 9,982,80 Profit $ 509,880 5.350,000 2,960,000 145,680 407,680 170,880 335,880 920,880 185,00 5,122,000 $ 228,888 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 Sales $ 15,700,000 Cost of goods purchased 9,960,000 Change in inventory 222,000 Depreciation expense 1,377.000 Patent amortization 170,000 Interest expense 850,000 Other expense 1,670,000 Goodwill impairment loss 31,750 Other expense $ 14,280,750 $ 1,419,250 Profit Attributable to: Brady's shareholders Non-controlling interest $ 0 Brady Ltd Consolidated Statement of Financial Position December 31, Year 6 Assets Plant and equipment 14,400,000 Patents (770,000) Goodwill Inventory (7.550,000) Accounts receivable 3,000,000 Cash (1.140,000) $ 7,940,000 $ 7.421,000 (10.161.000) Liabilities and Equity Ordinary shares Retained earnings Non-controlling interest Bonds payable Accounts payable 7.700.000 6.719,000 $ 11,679,000 On January 2 Year 4, Brady Ltd., a private company purchased 80% of the outstanding shares of Partridge Ltd. for $4.820.000. Partridge's statement of financial position and the fair values of its Identifiable assets and liabilities for that date were as follows: Plant and equipent (net) Patents (net) Inventory Accounts receivable Fair Value $4,850,000 1,920,000 2,620,880 1,850,000 570,880 Cash Carrying Amount $ 4,85e,eee 1,350, eee 2,350. eee 1,85e,eee 570.ece $10,978, eee $ 2,071,eee 2,929, eee 3,350,000 2,629,eee $18,978,eee Ordinary shares Retained earnings 1ex bonds payable Accounts payable 3,720,000 2,629,000 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: $46,000 Year 6: $31.750 Partridge declared and paid dividends of $135.000 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. Partridge $ 5,7eeeee 770,eee On December 31, Year 6, the financial statements of the two companies were as follows: STATEMENT OF FINANCIAL POSITION Brady Plant and equipment (net) $ 8,7ee,eee Patents (net) Investment in Partridge Ltd. (equity method) 5,141,eee Inventory 5,300,eee Accounts receivable 1,350,000 Cash 478,eee $28,961,000 Ordinary shares $ 5,358,eee Retained earnings 6,432,eee Bonds payable 4,350, eee Accounts payable 4,829,800 $28,961,000 2,250,eee 1.650.000 678,eee $11,848,eee $ 2,671,eee 3,729,eee 3,358,eee 1,890.ece $11,040,eee Partridge $5,350,000 INCOME STATEMENTS Brady Sales $18,350,00 Equity method income 141,880 18,491,080 Cost of goods purchased 7,080, ee Change in inventory 77,880 Depreciation expense 970, cee Patent amortization expense Interest expense 515,880 Other expenses 750,880 Income taxes 670,000 9,982,80 Profit $ 509,880 5.350,000 2,960,000 145,680 407,680 170,880 335,880 920,880 185,00 5,122,000 $ 228,888 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 Sales $ 15,700,000 Cost of goods purchased 9,960,000 Change in inventory 222,000 Depreciation expense 1,377.000 Patent amortization 170,000 Interest expense 850,000 Other expense 1,670,000 Goodwill impairment loss 31,750 Other expense $ 14,280,750 $ 1,419,250 Profit Attributable to: Brady's shareholders Non-controlling interest $ 0 Brady Ltd Consolidated Statement of Financial Position December 31, Year 6 Assets Plant and equipment 14,400,000 Patents (770,000) Goodwill Inventory (7.550,000) Accounts receivable 3,000,000 Cash (1.140,000) $ 7,940,000 $ 7.421,000 (10.161.000) Liabilities and Equity Ordinary shares Retained earnings Non-controlling interest Bonds payable Accounts payable 7.700.000 6.719,000 $ 11,679,000