On July 1, Year 4, Aaron Co. purchased 80% of the voting shares of Bondi Ltd. for $547,840. 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. Bondis 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 $8,369 in Year 5 and $5,573 in Year 6.

BONDI LTD.
STATEMENT OF FINANCIAL POSITION
As at July 1, Year 4
	Carrying amount			Fair value
Plant assets (net)	$	544,000		$	454,000
Inventory		184,000			232,000
Accounts receivable		124,000			148,004
Cash		100,000			100,000
	$	952,000
Ordinary shares	$	124,000
Retained earnings		516,400
Bonds payable		204,000			190,534
Current liabilities		107,600			107,600
	$	952,000

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
		Aaron			Bondi
Plant assets (net)	$	724,000		$	544,000
Investment in Bondi		518,338
Other investments		266,666
Inventory		304,000			280,000
Accounts receivable		184,000			118,000
Cash		124,000			84,400
	$	2,121,004		$	1,026,400
Ordinary shares	$	304,600		$	124,000
Retained earnings		1,313,204			558,600
Bonds payable		319,000			204,000
Current liabilities		184,200			139,800
	$	2,121,004		$	1,026,400

INCOME STATEMENTS
Sales	$	1,265,000		$	1,204,000
Equity method income from Bondi		2,706
Income from other investments		25,400
		1,293,106			1,204,000
Raw materials used	$	884,000		$	1,009,000
Change in inventory		(47,000)			15,800
Depreciation		64,000			54,400
Interest expense		41,000			26,800
Other expenses		231,000			91,600
	$	(1,173,000)		$	(1,197,600)
Profit	$	120,106		$	6,400

Required:

(a) Prepare the consolidated financial statements for the year ended December 31, Year 6