Paper Corp. purchased 70% of the outstanding shares of Sand Ltd. on January 1, Year 2, at a cost of $87,535. 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 $29,750, and fair values were equal to carrying amounts for all its net assets, except inventory (fair value was $5,200 less than carrying amount) and equipment (fair value was $17,400 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	$			$	22,000
Accounts receivable		44,000			32,700
Note receivable					31,800
Inventory		84,600			50,000
Equipment (net)		292,000			82,000
Land		191,000			42,000
Investment in Sand		135,884
	$	747,484		$	260,500
Bank indebtedness	$	172,145		$
Accounts payable		74,000			60,500
Notes payable		31,800
Common shares		150,000			50,000
Retained earnings		319,539			150,000
	$	747,484		$	260,500

INCOME STATEMENTS
For the year ended December 31, Year 5
	Paper			Sand
Sales	$	846,000		$	365,700
Management fee revenue		25,200
Equity method income from Sand		2,862
Interest income					3,180
Gain on sale of land					10,800
		874,062			379,680
Cost of sales		507,600			243,800
Research and development expenses		46,000			16,800
Interest expense		19,600
Miscellaneous expenses		118,000			32,800
Income taxes		72,660			34,512
		763,860			327,912
Net income	$	110,202		$	51,768

Additional Information

• During Year 5, Sand made a cash payment of $2,100 per month to Paper for management fees, which is included in Sands Miscellaneous expenses.
• During Year 5, Paper made intercompany sales of $110,000 to Sand. The December 31, Year 5, inventory of Sand contained goods purchased from Paper amounting to $33,000. These sales had a gross profit of 35%.
• On April 1, Year 5, Paper acquired land from Sand for $31,800. This land had been recorded on Sands books at a carrying amount of $21,000. Paper paid for the land by signing a $31,800 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 $4,700.
• 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 $36,350 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		$