Paper Corp. purchased 70% of the outstanding shares of Sand Ltd. on January 1, Year 2, at a cost of $80,220. 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 $24,000, and fair values were equal to carrying amounts for all its net assets, except inventory (fair value was $3,800 less than carrying amount) and equipment (fair value was $11,400 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: Additional Information - During Year 5, Sand made a cash payment of $1,400 per month to Paper for management fees, which is included in Sand's Miscellaneous expenses. - During Year 5, Paper made intercompany sales of $70,000 to Sand. The December 31, Year 5, inventory of Sand contained goods purchased from Paper amounting to $21,000. 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 Sand's books at a carrying amount of $14,000. 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 $4,000. - 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.) (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.)