Problem 11-1 LO3, 4, 6 On December 31, Year 1, Precision Manufacturing Inc. (PMI) of Edmonton purchased 100% of the outstanding ordi- nary shares of Sandora Corp. of Flint, Michigan. Sandora's comparative statement of financial position and Year 2 income statement are as follows: STATEMENT OF FINANCIAL POSITION Plant and equipment (net) Inventory Accounts receivable Cash Ordinary shares Retained earnings Bonds payable due Dec. 31, Year 6 Current liabilities At December 31 Year 2 US$ 6,600,000 5,700,000 6,100,000 780,000 US$19,180,000 US$ 5,000,000 7,480,000 4,800,000 1,900,000 US$19,180,000 Year 1 US$ 7,300,000 6,300,000 4,700,000 900,000 US$19,200,000 US$ 5,000,000 7,000,000 4,800,000 2,400,000 US$19,200,000 Sales Cost of purchases Change in inventory Depreciation expense Other expenses Profit INCOME STATEMENT For the year ended December 31, Year 2 US$30,000,000 23,400,000 600,000 700,000 3,800,000 28,500,000 US$ 1,500,000