On January 2 Year 4, Paypal Ltd. purchased 80% of the outstanding shares of Saypal Ltd. for $2.040.000 Al that date, Saypal had common shares of $500,000 and retained eamings of $1,290,000 and accumulated depreciation of $640.000. Paypal acquired the Saypal shares to obtain control of mineral nights owned by Saypal. At the date of acquisition, these mineral rights were valued at $700,000, were not recognized on Saypal's separate entity balance sheet, and had an useful site of 10 years. Except for the mineral rights, the carrying amount of the recorded assets and liabilities of Saypal were equal to their fair values On December 31, Year 7, the trial balances of the two companies were as follows Cash $ Paypa 1,040,000 Saypal $ 504,000 Accounts receivable 2,080.000 3.140.000 14.560,000 396.000 2.045.000 2,940.000 Investment in Saypal job 2.040.000 in bonds Cost of goods 242,000 2,420,000 850.800 D 071.000 304,000 37.000 605.200 300.000 600.000 250.000 $27.551.200 700000 " 35.000 2518.500 Accumulated deprecator plant and wipment 4064400 1040,000 Bonds payable 500.000 12.000 Common sha 4.500.000 500,000 Retired eanings January 1 10.800.000 1000000 Sales 4040.000 2043.500 200.000 $ 27,561.200 22,000 $ 7.930800 Additional information The Year 7 net incomes of the two companies are as follows 1,040,000 514,700 The mineral rights owned by Saypal have increased in value since the date of acquisition and were worth $0.600 at December 31, Year On January 2 Year 5 Paypal sot equipment to Saypal for $540,000. The equipment had a carrying amount of $432.000 at the time of the sale. The remaining useful site of the equipment was 5 years The Year 7 opening inventories of Paypal contained $504.000 of merchandise purchased from Saypal during Year 6 lieypal had recorded a gross profit of $201,600 on this merchandise During Year 7 Saypal's sales to Paypal totaled $1.004,000. These sales were made at a gross profit rate of 30% Papa's ending inventory contains $304,000 of merchandise purchased from Saypal The Year 7 opening inventories of Saypal contained $300,000 of merchandise purchased from Paypal during Year 6. Paypal had recorded a gross profit of $75,000 on this merchandise During Year 7. Paypal's sales to Saypal totaled $800.000. These sales were made at a gross proft rate of 25% Saypal's ending inventory contains $55,000 of gross profit recorded by Paypal On January 2 Year 5. Paypal issued 0%, 7 year bonds with a face value of $500.000 for $521,000 interest is paid annually on December 31. On January 2, Year 6, Saypal purchased one-half of this issue on the open market at a cost of $238,000 Other expenses include depreciation expense Tax alocation wil be at a rate of 40% one-hall u Other expenses include depreciation expense. Tax allocation will be at a rate of 40%. Required: 1. Calculate acquisition differential and goodwill. 5 Marks 2. Prepare amortization schedule. 5 Marks 3. Prepare schedule for intercompany profit on sale of equipment. 5 Marks 4. Prepare schedule for profit on sale of intercompany inventory. 5 Marks 5. Prepare schedule for gain/loss retirement of intercompany bond. 10 Marks 6. Calculate deferred income tax. 5 Marks 7. Calculate consolidated net income for yr. 7 and show the allocation between Paypal and Saypal. 10 Marks 8. Prepare consolidated income statement. 15 Marks. 9. Prepare consolidated statement of retained earnings. 10 Marks 10. Calculate NCI as of December 31 yr. 7. 10 Marks 11. Prepare Consolidated Statement of Financial Position. 20 Marks L