Paper Corp. purchased $70\%$ of the outstanding shares of Sand Ltd$.$ on January $1,$ Year $2,$ at a cost of $$90,440.$ Paper has always used the equity method to account for its investments. On January $1,$ Year $2,$ Sand had common shares of $$50,000$ and retained earnings of $$30,500,$ and fair values were equal to carrying amounts for all its net assets, except inventory $($fair value was $$5,400$ less than carrying amount$)$ and equipment $($fair value was $$17,700$ greater than carrying amount$).$ The equipment, which is used for research, had an estimated remaining life of six years on January $1,$ Year $2.$

The following are the financial statements of Paper Corp. and its subsidiary Sand Ltd$.$ as at December $31,$ Year $5$: