The following financial statements were prepared on December 31, Year 6. BALANCE SHEET Silver $ 380,000 Cash Accounts receivable Inventory Plant and equipment Accumulated depreciation Investment in Silver Company (at cost) 700,000 5,490,000 (590,000) Pearl 580,000 480,000 3,400,000 4,400,000 (1,030,000) 5,200,000 $13,030,000 $ 414,000 5,650,000 6,966,000 $13,030,000 Liabilities Common shares Retained earnings $5,980,000 $1,056,000 3,000,000 1,924,000 $5,980,000 $ 2,400,000 Sales Dividend income Cost of sales Miscellaneous expenses Administrative expense Income tax expense INCOME STATEMENT $ 5,400,000 384,000 5,784,000 2,780,000 460,000 108,000 390,000 (3,738,000) $ 2,046,000 2,400,000 680,000 98,000 38,000 260,000 (1,076,000) $ 1,324,000 Net income RETAINED EARNINGS STATEMENT Balance, January 1 $ 5,700,000 Net income 2,046,000 7,746,000 Dividends (780,000) Balance, December 31 $ 6,966,000 $ 1,080,000 1,324,000 2,404,000 (480,000) $ 1,924,000 Additional Information Pearl purchased 80% of the outstanding voting shares of Silver for $5,200,000 on July 1, Year 2, at which time Silver's retained earnings were $540,000, and accumulated depreciation was $88,000. The acquisition differential on this date was allocated as follows: 30% to undervalued inventory 40% to equipment-remaining useful life 8 years Balance to goodwill During Year 3, a goodwill impairment loss of $98,000 was recognized, and an impairment test conducted as at December 31, Year 6, indicated that a further loss of $48,000 had occurred. Amortization expense is grouped with cost of goods sold and impairment losses are grouped with administrative expenses. Silver owes Pearl $103,000 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.) 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.) Pearl Company Consolidated Income Statement For the Year Ended December 31, Year 6 Attributable to Pearl's shareholders Non-controlling interest Pearl Company Consolidated Retained Earnings Statement For the Year Ended December 31, Year 6 (Click to select) (Click to select) (Click to select) (Click to select) $ Pearl Company Consolidated Balance Sheet December 31, Year 6 Assets Pearl Company Consolidated Balance Sheet December 31, Year 6 Assets Liabilities and Equity The following financial statements were prepared on December 31, Year 6. BALANCE SHEET Silver $ 380,000 Cash Accounts receivable Inventory Plant and equipment Accumulated depreciation Investment in Silver Company (at cost) 700,000 5,490,000 (590,000) Pearl 580,000 480,000 3,400,000 4,400,000 (1,030,000) 5,200,000 $13,030,000 $ 414,000 5,650,000 6,966,000 $13,030,000 Liabilities Common shares Retained earnings $5,980,000 $1,056,000 3,000,000 1,924,000 $5,980,000 $ 2,400,000 Sales Dividend income Cost of sales Miscellaneous expenses Administrative expense Income tax expense INCOME STATEMENT $ 5,400,000 384,000 5,784,000 2,780,000 460,000 108,000 390,000 (3,738,000) $ 2,046,000 2,400,000 680,000 98,000 38,000 260,000 (1,076,000) $ 1,324,000 Net income RETAINED EARNINGS STATEMENT Balance, January 1 $ 5,700,000 Net income 2,046,000 7,746,000 Dividends (780,000) Balance, December 31 $ 6,966,000 $ 1,080,000 1,324,000 2,404,000 (480,000) $ 1,924,000 Additional Information Pearl purchased 80% of the outstanding voting shares of Silver for $5,200,000 on July 1, Year 2, at which time Silver's retained earnings were $540,000, and accumulated depreciation was $88,000. The acquisition differential on this date was allocated as follows: 30% to undervalued inventory 40% to equipment-remaining useful life 8 years Balance to goodwill During Year 3, a goodwill impairment loss of $98,000 was recognized, and an impairment test conducted as at December 31, Year 6, indicated that a further loss of $48,000 had occurred. Amortization expense is grouped with cost of goods sold and impairment losses are grouped with administrative expenses. Silver owes Pearl $103,000 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.) 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.) Pearl Company Consolidated Income Statement For the Year Ended December 31, Year 6 Attributable to Pearl's shareholders Non-controlling interest Pearl Company Consolidated Retained Earnings Statement For the Year Ended December 31, Year 6 (Click to select) (Click to select) (Click to select) (Click to select) $ Pearl Company Consolidated Balance Sheet December 31, Year 6 Assets Pearl Company Consolidated Balance Sheet December 31, Year 6 Assets Liabilities and Equity