Paper Corp. purchased 70% of the outstanding shares of Sand Ltd. on January 1, Year 2, at a cost of $83,860. 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 $26,000, and fair values were equal to carrying amounts for all its net assets, except inventory (fair value was $4,100 less than carrying amount) and equipment (fair value was $12,600 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:

BALANCE SHEETS
At December 31, Year 5
	Paper		Sand
Cash	$	-		$	17,000
Accounts receivable		39,500			29,200
Note receivable		-			34,000
Inventory		75,500			47,500
Equipment (net)		255,000			79,500
Land		176,000			37,000
Investment in Sand		124,530			-
	$	670,530		$	244,200
Bank indebtedness	$	133,495		$	-
Accounts payable		64,000			56,700
Notes payable		34,000			-
Common shares		150,000			50,000
Retained earnings		289,035			137,500
	$	670,530		$	244,200

INCOME STATEMENTS
For the year ended December 31, Year 5
	Paper		Sand
Sales	$	826,000		$	318,900
Management fee revenue		19,200			-
Equity method income from Sand		322			-
Interest income		-			3,400
Gain on sale of land		-			18,000
		845,522			340,300
Cost of sales		495,600			212,600
Research and development expenses		43,500			14,800
Interest expense		15,600			-
Miscellaneous expenses		113,000			26,800
Income taxes		71,560			34,440
		739,260			288,640
Net income	$	106,262		$	51,660

Additional Information

• During Year 5, Sand made a cash payment of $1,600 per month to Paper for management fees, which is included in Sand's Miscellaneous expenses.
• During Year 5, Paper made intercompany sales of $80,000 to Sand. The December 31, Year 5, inventory of Sand contained goods purchased from Paper amounting to $24,000. These sales had a gross profit of 35%.
• On April 1, Year 5, Paper acquired land from Sand for $34,000. This land had been recorded on Sand's books at a carrying amount of $16,000. Paper paid for the land by signing a $34,000 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 $4,200.
• 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 Paper's 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 Paper's 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 $

(ii) Land $

(iii) Notes payable $

(iv) Non-controlling interest $

(v) Common shares $

(d) Assume that an independent business valuator valued the non-controlling interest at $33,150 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.)

Goodwill impairment loss		$
Profit attributable to non-controlling interest		$