Par Inc. $($Parent$)$ purchased $8500$ of the outstanding shares of Sub Inc. $($Subsidiary$)$ for $$450,000$ on January $1,2019.$ On that date, Sub Inc. had common shares of $$310,000$ and retained earnings worth $$170,000.$ Par Inc. uses the FVE Direct Method to value the non$-$controlling interest in Sub Inc. on the acquisition date. Sub Inc. had $10,000$ shares trading at $$50$ per share as of Jan $1,2019.$

The balance sheets of both companies, as well as the Sub's fair values if different from the carrying value are shown below. Additional notes:

$$ The equipment had a remaining useful life of $8$ years $($straight line$)$ from the date of acquisition.

$$ The inventory was sold in the year of the acquisition $($e$.$g$.$ in $2019).$

$$ As of Jan $1,2019,$ the bond payable has $10$ years until maturity $($straight line$).$

$$ The patent was generated internally and is not currently on the books of the sub. The useful life of the patent is $8$ years from the date of acquisition. FV of the patent is $$24,000.$

$1-$Jan$-2019$

Par Inc. Sub Inc. Sub Inc.

$($carrying value$)($carrying value$)($fair value$)$

Cash $$600,000$ $$415,000$

Accounts Receivable $$140,000$ $$85,000$

Inventory $$60,000$ $$45,000$ $$55,000$

Investment in Sub Inc. $$700,000$

Equipment $($net$)$ $$50,000$ $$180,000$ $$192,000$

Land $$115,000$

Total Assets $$1,550,000$ $$840,000$

Current Liabilities $$100,000$ $$280,000$

Bonds Payable $$160,000$ $$80,00085,000$

Common Shares $$800,000$ $$310,000$

Retained Earnings $$490,000$ $$170,000$

Total Liabilities and Equity $$1,550,000$ $$840,000$

The following are the financial statements for both companies for the current fiscal year ended December $31,2021$:

Income Statements $$ year ended December $31,2021$

Par Inc. Sub Inc.

Sales $$700,000$ $$300,000$

Other Revenue $$121,000$

Less: Expenses:

Cost of Goods Sold $$240,000$ $$130,000$

Depreciation Expense$*$ $$10,000$ $$20,000$

Interest Expense $$12,000$ $$40,000$

Other Expenses $$4,000$ $$50,000$

Tax expense $$4,000$ $$10,000$

Net Income $$551,000$ $$50,000$

$*$depreciation and amortization for ALL assets is tracked in the depreciation expense account.

Retained Earnings Statements $$ at December $31,2021$

Par Inc. Sub Inc.

Balance, January $1,2020$ $$841,000$ $$210,000$

Net Income $$551,000$ $$50,000$

Dividends $$351,000$ $$40,000$

Balance, December $31,2020$ $$1,041,000$ $$220,000$

Par Inc. uses the cost method to account for its investment in Sub Inc. Additional information relevant to the current Year $2021$:

$$ Intercompany sales were made as follows: $$190,000$ by Par to Sub; and $$60,000$ by Sub to Par.

$$ Par rented out a warehouse to Sub during the year for a total of $$35,000($booked in other revenue and other expenses$).$ Any amounts outstanding were paid by Sub before the end of the year.

$$ $$55,000$ of inventory sold by Par to Sub remained in Sub$$s warehouse at year end $(2021).$

$$ $$25,000$ of inventory sold by Sub to Par remained in Par$$s warehouse at year end $(2021).$

$$ A total of $$22,000$ of inventory sold by Par to Sub and $$15,000$ of inventory sold by Sub to Par remained in the warehouse at the end of $2020.$

$$ Par sold Sub a piece of equipment on January $1,2020$ which resulted in a gain of $$20,000.$ At that time $($Jan $1,2020),$ the equipment had a useful life of $5$ years.

$$ Par Inc. owed Sub Inc. $$35,000($e$.$g$.$ account payables$)$ on December $31,2021.$

$$ A goodwill impairment of $$30,000$ was required in the year. Impairment is shown as a separate line item on the financial statements.

$$ Sub paid a dividend to its shareholders of $$40,000$ in $2021.$

Both companies are subject to a tax rate of $40\%.$ The gross profit percentage on sales is $25\%$ for both companies.

REQUIRED: Prepare all calculations.

$1)$ Using your $5$ steps, calculate the goodwill on the date of acquisition $($Jan $1,2019).$ You must show your analysis for all $5$ steps of the process $($including Table $1).5$ marks

$2)$ Calculate the value of the NCI on the date of acquisition $($Jan $1,2019).$ i$.$e$.$ this is step $6.1$ mark

$3)$ Prepare Table $2$: Calculate the amount of amortization for all relevant years for the acquisition differential $($AD$)$ for all relevant items and the amount of the AD remaining at December $31,2021.$ You can organize your analysis in a similar format as the example below: $5$ marks