The balance sheets of Forest Company and Garden Company are presented below as at December 31, Year 8.

BALANCE SHEETS At December 31, Year 8
		Forest			Garden
Cash	$	12,400		$	62,800
Receivables		24,400			100,674
Inventories		79,400			76,000
Investment in shares of Garden		308,700
Plant and equipment		739,400			474,000
Accumulated depreciation		(626,500)			(362,400)
Patents					18,500
Investment in bonds of Forest					58,426
	$	537,800		$	428,000
Current liabilities	$	59,394		$	52,400
Dividends payable		6,000			29,400
Bonds payable 6%		94,846
Common shares		200,000			150,000
Retained earnings		177,560			196,200
	$	537,800		$	428,000

Additional Information

• Forest acquired 90% of Garden for $308,700 on July 1, Year 1, and accounts for its investment under the cost method. At that time, the shareholders equity of Garden amounted to $189,000, the accumulated amortization was $109,000, and the assets of Garden were undervalued by the following amounts:

Inventory	$	26,000
Buildings	$	24,000		remaining life, 10 years
Patents	$	72,000		remaining life, 8 years

• During Year 8, Forest reported net income of $55,000 and declared dividends of $39,000, whereas Garden reported net income of $77,000 and declared dividends of $64,000.
• During Years 2 to 7, goodwill impairment losses totalled $2,650. An impairment test conducted in Year 8 indicated a further loss of $7,850.
• Forest sells goods to Garden on a regular basis at a gross profit of 30%. During Year 8, these sales totalled $149,400. On January 1, Year 8, the inventory of Garden contained goods purchased from Forest amounting to $17,400, while the December 31, Year 8, inventory contained goods purchased from Forest amounting to $21,400.
• On August 1, Year 6, Garden sold land to Forest at a profit of $17,400. During Year 8, Forest sold one-quarter of the land to an unrelated company.
• Forests bonds have a par value of $100,000, pay interest annually on December 31 at a stated rate of 6%, and mature on December 31, Year 11. Forest incurs an effective interest cost of 8% on these bonds. They had a carrying amount of $93,376 on January 1, Year 8. On that date, Garden acquired $60,000 of these bonds on the open market at a cost of $57,968. Garden will earn an effective rate of return of 7% on them. Both companies use the effective-interest method to account for their bonds.

The Year 8 income statements of the two companies show the following with respect to bond interest.

	Forest			Garden
Interest expense	$	7,470
Interest revenue				$	4,058

• Garden owes Forest $21,400 on open account on December 31, Year 8.
• Assume a 40% corporate tax rate and allocate bond gains (losses) between the two companies.

Required:

(a) Prepare the following statements:

(i) Consolidated balance sheet