Question 1 (75 Marks) Financial Statements of Peter Ltd. and its 80%-owned subsidiary Sam Ltd. as at December 31, Year 5, are presented below: Statement of Financial Position as at December 31 Year 5 Peter Ltd Sam Ltd Cash $ 8,100.00 $ 20,600.00 Accounts Receivables $ Inventory Investment in Sam 70,000.00 $ 55,000.00 $ 35,000.00 $ 46,000.00 $ 129,200.00 $ Deferred Taxes Plant Accumulated Depreciation $ $ 200,000.00 $ 104,000.00 $ -$ 88,000.00 - $ 30,000.00 $ 354,300.00 $ 195,600.00 Accounts Payable Other Liabilities Common Shares Retained Earnings $ 56,000.00 $ 70,100.00 $ 5,000.00 $ 5,500.00 $225,000.00 $ 50,000.00 $ 68,300.00 $ 70,000.00 $ 354,300.00 $ 195,600.00 Statement of Income for the year ended December 31, Year 5 Sales Dividend Income Peter Ltd Sam Ltd $ 535,400.00 $ 270,000.00 $ 9,900.00 $ $ 545,300.00 $ 270,000.00 $ 364,000.00 $ 206,000.00 Costs of Sales Selling expenses Admn expenses (including depreciation and goodwill impairment) Income taxes $ 78,400.00 $ 24,100.00 $ 46,300.00 $ 20,700.00 $ 13,800.00 $ 6,200.00 $ 502,500.00 $ 257,000.00 Net Income Statement of retained earnings Opening balance Add Net income Less dividend Closing balance $ 42,800.00 $ 13,000.00 Piter Ltd Sam Ltd $ 45,500.00 $ 68,000.00 $ 42,800.00 $ 13,000.00 -$ 20,000.00 -$ 11,000.00 $ 68,300.00 $ 70,000.00