Paper Corp. purchased 70% of the outstanding shares of Sand Ltd. on January 1, Year 2, at a cost of $98,630. 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 $32,900, and fair values were equal to carrying amounts for all its net assets, except inventory (fair value was $6,000 less than carrying amount) and equipment (fair value was $18,600 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: Addltionel Information - During Year 5, Sand made a cash payment of $2,500 per month to Paper for management fees, which is included in Sand's Miscellaneous expenses. - During Year 5. Paper made intercompany sales of $130,000 to Sand. The December 31, Year 5 , inventory of Sand contained goods purchased from Paper amounting to $39,000. These sales had a gross profit of 35%. - On April 1, Year 5. Paper acquired land from Sand for $37,900. This land had been recorded on Sand's books at a carrying amount of $25,000. Paper paid for the land by signing a $37,900 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 $5,100. - 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. Requlred: (a) Prepare, in good form, a calculation of goodwill and any undepleted acquisition differential as of December 31, Year 5. (Negotlve amounts should be Indlceted by o minus slan. Leove no cells blonk - be certaln to enter "O" wherever requlred. Omlt \$ slan In your (b) Prepare Paper's consolidated income statement for the year ended December 31 , Year 5 , with expenses classified by function. Round your onswer to neorest whole dollor.) c) Calculate the following balances that would appear on Paper's consolidated balance sheet as at December 31, Year 5: (Leove no sells blank - be certeln to enter "O" wherever requlred. Omit \$ sign In your response.) I) Inventory $ III) Land $ III) Notes payable $ Iv) Non-controlling interest v) Common shares $ (d) Assume that an independent business valuator valued the non-controlling interest at $40,050 at the date of acquisition. Calculate goodwill impairment loss and profit attributable to non-controlling interest for the year ended December 31, Year 5 . (Omlt $ sign In (our response.) Goodwill impairment loss Profit attributable to non-controlling interest Paper Corp. purchased 70% of the outstanding shares of Sand Ltd. on January 1, Year 2, at a cost of $98,630. 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 $32,900, and fair values were equal to carrying amounts for all its net assets, except inventory (fair value was $6,000 less than carrying amount) and equipment (fair value was $18,600 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: Addltionel Information - During Year 5, Sand made a cash payment of $2,500 per month to Paper for management fees, which is included in Sand's Miscellaneous expenses. - During Year 5. Paper made intercompany sales of $130,000 to Sand. The December 31, Year 5 , inventory of Sand contained goods purchased from Paper amounting to $39,000. These sales had a gross profit of 35%. - On April 1, Year 5. Paper acquired land from Sand for $37,900. This land had been recorded on Sand's books at a carrying amount of $25,000. Paper paid for the land by signing a $37,900 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 $5,100. - 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. Requlred: (a) Prepare, in good form, a calculation of goodwill and any undepleted acquisition differential as of December 31, Year 5. (Negotlve amounts should be Indlceted by o minus slan. Leove no cells blonk - be certaln to enter "O" wherever requlred. Omlt \$ slan In your (b) Prepare Paper's consolidated income statement for the year ended December 31 , Year 5 , with expenses classified by function. Round your onswer to neorest whole dollor.) c) Calculate the following balances that would appear on Paper's consolidated balance sheet as at December 31, Year 5: (Leove no sells blank - be certeln to enter "O" wherever requlred. Omit \$ sign In your response.) I) Inventory $ III) Land $ III) Notes payable $ Iv) Non-controlling interest v) Common shares $ (d) Assume that an independent business valuator valued the non-controlling interest at $40,050 at the date of acquisition. Calculate goodwill impairment loss and profit attributable to non-controlling interest for the year ended December 31, Year 5 . (Omlt $ sign In (our response.) Goodwill impairment loss Profit attributable to non-controlling interest