Paper Corp. purchased 70% of the outstanding shares of Sand Ltd. on January 1, Year 2, at a cost of $81,830. 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 $25,000, and fair values were equal to carrying amounts for all its net assets, except inventory (fair value was $4,000 less than carrying amount) and equipment (fair value was $12,000 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:

BALANCE SHEETS
At December 31, Year 5
	Paper			Sand
Cash	$			$	16,000
Accounts receivable		39,000			28,500
Note receivable					35,800
Inventory		75,000			47,000
Equipment (net)		250,000			79,000
Land		173,000			36,000
Investment in Sand		121,709
	$	658,709		$	242,300
Bank indebtedness	$	128,400		$
Accounts payable		62,000			57,300
Notes payable		35,800
Common shares		150,000			50,000
Retained earnings		282,509			135,000
	$	658,709		$	242,300

INCOME STATEMENTS
For the year ended December 31, Year 5
	Paper			Sand
Sales	$	822,000		$	316,200
Management fee revenue		18,000
Equity method income from Sand		1,987
Interest income					3,580
Gain on sale of land					20,800
		841,987			340,580
Cost of sales		493,200			210,800
Research and development expenses		43,000			14,400
Interest expense		14,800
Miscellaneous expenses		112,000			25,600
Income taxes		71,340			35,912
		734,340			286,712
Net income	$	107,647		$	53,868

Additional Information

• During Year 5, Sand made a cash payment of $1,500 per month to Paper for management fees, which is included in Sands Miscellaneous expenses.
• During Year 5, Paper made intercompany sales of $75,000 to Sand. The December 31, Year 5, inventory of Sand contained goods purchased from Paper amounting to $22,500. These sales had a gross profit of 35%.
• On April 1, Year 5, Paper acquired land from Sand for $35,800. This land had been recorded on Sands books at a carrying amount of $15,000. Paper paid for the land by signing a $35,800 note payable to Sand, bearing yearly interest at 10%. Interest for Year 5 was paid by Paper in cash on December 31, Year 5. This land was still being held by Paper on December 31, Year 5.
• The value of consolidated goodwill remained unchanged from January 1, Year 2, to July Year 5. On July 1, Year 5, a valuation was performed, indicating that the recoverable amount of consolidated goodwill was $4,100.
• During the year ended December 31, Year 5, Paper paid dividends of $80,000 and Sand paid dividends of $20,000.
• Sand and Paper pay taxes at a 40% rate. Assume that none of the gains or losses were capital gains or losses

Required:

(a) Prepare, in good form, a calculation of goodwill and any undepleted acquisition differential as of December 31, Year 5. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit $ sign in your response.)

	Balance			Changes to						Balance
	January 1, Year 2			Year 2-4			Year 5			Dec. 31, Year 5
Inventory		$			$			$			$
Equipment
Goodwill
		$			$			$			$

(b) Prepare Papers consolidated income statement for the year ended December 31, Year 5, with expenses classified by function. (Round your answer to nearest whole dollar.)

(c) Calculate the following balances that would appear on Papers consolidated balance sheet as at December 31, Year 5: (Leave no cells blank - be certain to enter "0" wherever required. Omit $ sign in your response.)

(i) Inventory

Inventory $

(ii) Land

Land $

(iii) Notes payable

Notes payable $

(iv) Non-controlling interest

Non-controlling interest $

(v) Common shares

Common shares $

(d) Assume that an independent business valuator valued the non-controlling interest at $32,700 at the date of acquisition. Calculate goodwill impairment loss and profit attributable to non-controlling interest for the year ended December 31, Year 5. (Omit $ sign in your response.)