On July 1, Year 4, Aaron Co. purchased 80% of the voting shares of Bondi Ltd. for $553,840. The statement of financial position of Bondi on that date follows. The accounts receivable of Bondi were collected in October, Year 4, and the inventory was completely sold by May Year 5. Bondi's fixed assets had a remaining life of 15 years on July 1, Year 4, and the bonds payable mature on June 30, Year 8. The bonds were issued on July 1, Year 1. The stated rate of interest on the bonds is 6% payable semi-annually. The market rate of interest was 8% on July 1, Year 4. Tests for impairment of goodwill indicated a loss of $8,429 in Year 5 and $5,603 in Year 6. BONDI LTD. STATEMENT OF FINANCIAL POSITION As at July 1, Year 4 Carrying amount Fair value $ 460,000 Plant assets (net) Inventory $550,000 190,000 238,000 Accounts receivable 130,000 154,004 Cash 106,000 106,000 $ 976,000 Ordinary shares Retained earnings Bonds payable Current liabilities $ 130,000 527,800 210,000 196,534 108,200 108,200 $ 976,000 The financial statements for Aaron and Bondi at December 31, Year 6, are presented below. Aaron has used the equity method to account for its investment in Bondi. STATEMENTS OF FINANCIAL POSITION Plant assets (net) Investment in Bondi Other investments Inventory Accounts receivable Cash Ordinary shares Retained earnings Bonds payable Current liabilities 286,000 124,000 Aaron $ 730,000 Bondi $ 550,000 515,366 290,666 310,000 190,000 130,000 85,000 $ 1,045,000 $ 130,000 559,200 210,000 145,800 $ 2,166,032 $ 310,600 1,340,232 325,000 190,200 $ 2,166,032 $ 1,045,000