On January 2, Year 4, Poplar Ltd. purchased 80% of the outstanding shares of Spruce Ltd. for $1,900,000. At that date, Spruce had common shares of $500,000 and retained earnings of $1,150,000 and accumulated depreciation of $500,000. Poplar acquired the Spruce shares to obtain control of mineral rights owned by Spruce. At the date of acquisition, these mineral rights were valued at $725,000, were not recognized on Spruce's separate-entity balance sheet, and had an useful life of 10 years. Except for the mineral rights, the carrying amount of the recorded assets and liabilities of Spruce were equal to their fair values. On December 31, Year 7, the trial balances of the two companies were as follows:

On January 2, Year 4, Poplar Ltd. purchased 80% of the outstanding shares of Spruce Ltd. for $1,900,000. At that date, Spruce had common shares of $500,000 and retained earnings of $1,150,000 and accumulated depreciation of $500,000. Poplar acquired the Spruce shares to obtain control of mineral rights owned by Spruce. At the date of acquisition, these mineral rights were valued at $725,000, were not recognized on Spruce's separateentity balance sheet, and had an useful life of 10 years. Except for the mineral rights, the carrying amount ofthe recorded assets and liabilities of Spruce were equal to their fair values. On December 31, Year 7, th trial balances ofthe two companies were as follows: Poplar Spruce Cash $ 988,888 $ 528,888 Accounts receivable 1,888,888 256,888 Inventory 2,788,888 1,986,888 Plant and equipment 12,688,888 2,888,888 Investment in Spruce (cost) 1,988,888 Investment in bonds 7 588,888 Cost of goods sold 2,388,888 884,888 Other expenses 962,888 328,888 Interest expense 38,888 Income tax expense 688,888 258,888 Dividends 688,888 258,888 $24,466,666 $7,694,666 Accounts payable $ 2,392,888 $2,378,588 Accumulated depreciation: plant and equipment 3,839,588 988,888 Bonds payable 588,888 Premium on bonds payable 8,888 Common shares 4,588,888 588,888 Retained earningsJ January 1 8,168,588 1,9?4,888 Sales 4,666,666 1,966,666 Dividend revenue 288,888 Interest revenue 41,588 $24,466,666 $7,694,888 Additionai in formation - The Year 7 net incomes of the two companies are as follows: Poplar' Ltd. $ 1,956,399 Spr'uce Ltd. 531,599 [ - The mineral rights owned by Spruce have increased in value since the date of acquisition and were worth $943,000 at December 31, Year 7. - On January 2. Year 5, Poplar sold equipment to Spruce for $410,000. The equipment had a carrying amount of $328,000 at the time of the sale. The remaining useful life of the equipment was 5 years. - The Year 7 opening inventories of Poplar contained $520,000 of merchandise purchased from Spruce during Year 6. Spruce had recorded a gross profit of $208,000 on this merchandise. During Year 7, Spruce's sales to Poplar totalled $1,020.000. These sales were made at a gross prot rate of 35%. Poplar's ending inventory contains $320,000 of merchandise purchased from Spruce. Other expenses include depreciation expense. Tax allocation will be at a rate of 40%. Required: la) Prepare the following consolidated financial statements for Year 7: li) Income statement (Input all values as positive numbers.) Required: (a) Prepare the following consolidated financial statements for Year 7: (i) Income statement (Input all values as positive numbers.) Total revenues Total expenses Attributable to: Shareholders of Poplar NCI (ii) Retained earnings statement (Input all values as positive numbers. Omit $ sign in your response.) Poplar Ltd. Consolidated Statement of Retained Earnings Year 7 (Click to select) (Click to select) (Click to select) (Click to select) V(iii) Balance sheet (Amounts to be deducted should be indicated with a minus sign.} Total assets {b} Calculate the December 31, Year 7, balance in the account Investment in Spruce if Poplar had used the equity method to account for its investment. (Omit 5 sign in your response.) Balance, Dec. 31. Year 7 $