On January 2, Year 4, Poplar Ltd. purchased 80% of the outstanding shares of Spruce Ltd. for $2,070,000. At that date, Spruce had common shares of $500,000 and retained earnings of $1,320,000 and accumulated depreciation of $670,000. 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 $767,500, were not recognized on Spruces separate-entity balance sheet, and had an indefinite useful life. 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:

		Poplar			Spruce
Cash	$	1,070,000		$	507,000
Accounts receivable		2,140,000			426,000
Inventory		3,210,000			2,076,000
Plant and equipment		14,980,000			2,970,000
Investment in Spruce (cost)		2,070,000
Investment in bonds					495,000
Cost of goods sold		2,470,000			861,900
Other expenses		969,000			307,000
Interest expense		45,000
Income tax expense		710,600			420,000
Dividends		600,000			250,000
	$	28,264,600		$	8,312,900
Accounts payable	$	2,562,000		$	2,548,500
Accumulated depreciation: plant and equipment		4,112,700			1,070,000
Bonds payable		500,000
Premium on bonds payable		8,000
Common shares		4,500,000			500,000
Retained earnings, January 1		11,411,900			2,095,900
Sales		4,970,000			2,070,000
Dividend revenue		200,000
Interest revenue					28,500
	$	28,264,600		$	8,312,900

Additional Information

The Year 7 net incomes of the two companies are as follows:

Poplar Ltd.	$	960,000
Spruce Ltd.		525,000

	The mineral rights owned by Spruce have increased in value since the date of acquisition and were worth $931,300 at December 31, Year 7.
	On January 2, Year 5, Spruce sold equipment to Poplar for $570,000. The equipment had a carrying amount of $456,000 at the time of the sale. The remaining useful life of the equipment was five years.
	The Year 7 opening inventories of Poplar contained $507,000 of merchandise purchased from Spruce during Year 6. Spruce had recorded a gross profit of $202,800 on this merchandise.
	During Year 7, Spruces sales to Poplar totalled $1,007,000. These sales were made at a gross profit rate of 40%.
	Poplars ending inventory contains $307,000 of merchandise purchased from Spruce.
	Other expenses include depreciation expense and copyright amortization expense.
	Tax allocation will be at a rate of 40%.

Required:

(a)	Prepare the following consolidated financial statements for Year 7:

(i)	Income statement (Input all values as positive numbers.)

Poplar Ltd.
Consolidated Income Statement
Year 7
Total revenues	$
Total expenses	$
Attributable to:
Shareholders of Poplar	$
NCI
	$

(ii)	Retained earnings statement (Input all values as positive numbers.)

Poplar Ltd.
Consolidated Statement of Retained Earnings
Year 7
(Click to select)Retained earnings, December 31, Year 7Retained earnings, January 1, Year 7	$
(Click to select)Less: Net incomeAdd: Net income
(Click to select)Less: DividendsAdd: Dividends
(Click to select)Retained earnings, January 1, Year 7Retained earnings, December 31, Year 7	$

(iii)

Balance sheet (Amounts to be deducted should be indicated with a minus sign.)

Poplar Ltd.
Consolidated Balance Sheet
Dec. 31, Year 7
(Click to select)Deferred income taxesInvestment in bondsAccounts receivablePatentsMineral rightsAccumulated depreciationInventoryLandPlant and equipmentCashCurrent assets	$
(Click to select)InventoryDeferred income taxesPatentsInvestment in bondsCurrent assetsPlant and equipmentAccounts receivableAccumulated depreciationLandMineral rightsCash
(Click to select)Plant and equipmentDeferred income taxesLandInvestment in bondsCurrent assetsCashInventoryAccumulated depreciationAccounts receivablePatentsMineral rights
(Click to select)Plant and equipmentCurrent assetsPatentsCashInventoryAccumulated depreciationInvestment in bondsMineral rightsAccounts receivableDeferred income taxesLand
(Click to select)Current assetsAccumulated depreciationPlant and equipmentLandDeferred income taxesMineral rightsAccounts receivablePatentsCashInvestment in bondsInventory
(Click to select)Deferred income taxesCashLandPatentsMineral rightsPlant and equipmentInventoryInvestment in bondsAccounts receivableCurrent assetsAccumulated depreciation
(Click to select)PatentsCurrent assetsInvestment in bondsDeferred income taxesLandAccumulated depreciationAccounts receivableInventoryCashPlant and equipmentMineral rights
(Click to select)CashPlant and equipmentInvestment in bondsAccumulated depreciationPatentsLandDeferred income taxesInventoryCurrent assetsMineral rightsAccounts receivable
Total assets	$
(Click to select)Non-controlling interestBonds payableCommon sharesAccounts payableRetained earningsPremium on bonds payable	$
(Click to select)Premium on bonds payableBonds payableCommon sharesAccounts payableNon-controlling interestRetained earnings
(Click to select)Premium on bonds payableRetained earningsAccounts payableNon-controlling interestCommon sharesBonds payable
(Click to select)Premium on bonds payableBonds payableNon-controlling interestRetained earningsAccounts payableCommon shares
(Click to select)Bonds payableNon-controlling interestPremium on bonds payableAccounts payableRetained earningsCommon shares
(Click to select)Accounts payablePremium on bonds payableRetained earningsNon-controlling interestBonds payableCommon shares
Total liabilities and shareholders' equity	$

(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.

Balance, Dec. 31, Year 7

$