The following financial statements were prepared on December 31, Year 6.

BALANCE SHEET
		Pearl				Silver
Cash	$	490,000			$	290,000
Accounts receivable		390,000
Inventory		2,950,000				610,000
Plant and equipment		3,950,000				4,590,000
Accumulated depreciation		(940,000	)			(500,000	)
Investment in Silver Company (at cost)		4,300,000
	$	11,140,000			$	4,990,000
Liabilities	$	567,000			$	813,000
Common shares		4,750,000				2,550,000
Retained earnings		5,823,000				1,627,000
	$	11,140,000			$	4,990,000

INCOME STATEMENT
Sales	$	4,950,000		$	1,950,000
Dividend income		312,000
		5,262,000			1,950,000
Cost of sales		2,690,000			590,000
Miscellaneous expenses		415,000			89,000
Administrative expense		99,000			29,000
Income tax expense		345,000			215,000
		(3,549,000)			(923,000)
Net income	$	1,713,000		$	1,027,000

RETAINED EARNINGS STATEMENT
Balance, January 1	$	4,800,000		$	990,000
Net income		1,713,000			1,027,000
		6,513,000			2,017,000
Dividends		(690,000)			(390,000)
Balance, December 31	$	5,823,000		$	1,627,000

Additional Information

Pearl purchased 80% of the outstanding voting shares of Silver for $4,300,000 on July 1, Year 2, at which time Silvers retained earnings were $495,000, and accumulated depreciation was $79,000. The acquisition differential on this date was allocated as follows:

20% to undervalued inventory

40% to equipmentremaining useful life 8 years

Balance to goodwill

During Year 3, a goodwill impairment loss of $89,000 was recognized, and an impairment test conducted as at December 31, Year 6, indicated that a further loss of $39,000 had occurred.

Amortization expense is grouped with cost of goods sold and impairment losses are grouped with administrative expenses.

Silver owes Pearl $94,000 on December 31, Year 6.

Required:

(a) Prepare consolidated financial statements on December 31, Year 6. (Input all amounts as positive values except accumulated depreciation which should be indicated by minus sign. Omit $ sign in your response.)

- Consolidated Income Statement

Pearl Company
Consolidated Retained Earnings Statement
For the Year Ended December 31, Year 6
(Click to select) Balance Dec. 31 Balance Jan. 1		$
(Click to select) Net loss Net income
(Click to select) Less: Dividends Add: Dividends
(Click to select) Balance Dec.31 Balance Jan. 1		$

- Consolidated Statement of Financial Position