Paper Corp. purchased 70% of the outstanding shares of Sand Ltd. on January 1, Year 2, at a cost of $75,950. 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 $20,000, and fair values were equal to carrying amounts for all its net assets, except inventory (fair value was $3,000 less than carrying amount) and equipment (fair value was $9,000 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	$			$	11,000
Accounts receivable		36,500			25,000
Note receivable					37,600
Inventory		67,500			44,500
Equipment (net)		225,000			76,500
Land		158,000			31,000
Investment in Sand		110,628
	$	597,628		$	225,600
Bank indebtedness	$	105,225		$
Accounts payable		52,000			53,100
Notes payable		37,600
Common shares		150,000			50,000
Retained earnings		252,803			122,500
	$	597,628		$	225,600

INCOME STATEMENTS
For the year ended December 31, Year 5
	Paper		Sand
Sales	$	802,000		$	302,700
Management fee revenue		12,000
Equity method income from Sand		6,087
Interest income					3,760
Gain on sale of land					27,600
		820,087			334,060
Cost of sales		481,200			201,800
Research and development expenses		40,500			12,400
Interest expense		10,800
Miscellaneous expenses		107,000			19,600
Income taxes		70,240			40,104
		709,740			273,904
Net income	$	110,347		$	60,156

Additional Information

• During Year 5, Sand made a cash payment of $1,000 per month to Paper for management fees, which is included in Sands Miscellaneous expenses.
• During Year 5, Paper made intercompany sales of $50,000 to Sand. The December 31, Year 5, inventory of Sand contained goods purchased from Paper amounting to $15,000. These sales had a gross profit of 35%.
• On April 1, Year 5, Paper acquired land from Sand for $37,600. This land had been recorded on Sands books at a carrying amount of $10,000. Paper paid for the land by signing a $37,600 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 $3,600.
• 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 $

(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 $30,450 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		$