vo Inventories Land Plant and equipment Accumulated depreciation Investment in Star common shares 85,560 55,000 37,000 77,000 420,000 770,000 (187,000) (307,000) 218,400 $ 727,960 $ 688,700 $ 94,800 $ 187,000 8,700 11,400 57,000 450,000 160,000 174, 460 273,300 $ 727,960 $ 688,700 Accounts payable Accrued liabilities Preferred shares Common shares Retained earnings ped ok int RETAINED EARNINGS STATEMENTS For the Year Ended December 31, Year 12 Par Star Balance, January 1 $184,460 $318,300 Net income (loss) 21,000 (18,000) 205,460 300,300 Dividends (31,000) (27,000) Balance, December 31 $174,460 $273,300 ences Other Information On January 1. Year 5, the balance sheet of Star showed the following shareholders' equity: $8 cumulative preferred shares, see shares issued Common shares, 2,000 shares issued Deficit (Note 1) $ 57,000 160,000 (87,000) $130,000 Note 1: Dividends on preferred shares are two years in arrears On this date, Par acquired 1,400 common shares of Star for a cash payment of $218,400, The fair values of Star's identifiable net assets differed from carrying amounts only with respect to the following Carrying Fair value Prey 1 of 2 !!! The fair values of Star's identifiable net assets differed from carrying amounts only with respect to the following: Fair value $ Accounts receivable Inventory Plant Long-term liabilities Carrying amount 41, ese 51,000 530,000 312,000 $ 39,000 58 , 580,000 332,000 The plant had an estimated remaining useful life of five years on this date, and the long-term liabilities had a maturity date of December 30, Year 12 Any goodwill is to be tested annually for impairment. . Both Par and Star make substantial sales to each other at an intercompany selling price that yields the same gross profit as the sales they make to unrelated customers. Intercompany sales in Year 12 were as follows: ces Par to Star Star to Par $ 260,000 351,000 During Year 12. Par billed Star $2,000 per month in management fees. At year-end, Star had paid for all months except for December The January 1 Year 12, inventories of the two companies contained unrealized intercompany profits as follows: Inventory of Par Inventory of Star $ 21,000 20,000 The December 31, Year 12, inventories of the two companies contained unrealized intercompany profits as follows: Inventory of Par Inventory of Star $ 42,000 44,800 . On July 1 Year 7 Star sold equipment to Par for $66 000 The eauinment had a carrving amount in the records of Star of Prey 1 of 2 Next > On July 1, Year 7. Star sold equipment to Par for $66,000. The equipment had a carrying amount in the records of Star of $46,000 on this date and an estimated remaining useful life of five years. Goodwill impairment losses were recorded as follows: Year 7. $78,000; Year 9, $48,570; and Year 12, $20,060. Assume a 40% corporate tax rate. Par has accounted for its investment in Star by the cost method All dividends in arrears were paid by December 31, Year 11. Required: (a) Prepare, with all necessary calculations, the following: (i) Year 12 consolidated retained earnings statement. (Input all amounts as positive values. Omit $ sign in your response.) Par Corp Consolidated Retained Earnings Statement Year Ended December 31, Year 12 Balance January 1 $ Net loss Dividends Balance December 31 $ (ii) Consolidated balance sheet as at December 31, Year 12. Par Corp. Consolidated Balance Sheet as at December 31, Year 12 Assets $ Prey 1 of 2 HE Next > 1 28 points Skipped $ 0 Liabilities and Equity eBook Print o References $ 0 (b) How would the return on equity attributable to Par's shareholders for Year 12 change if Star's preferred shares were non- cumulative instead of cumulative? O No Change O Change (c) On January 1, Year 13, Star issued common shares for $100,000 in cash. Because Par did not purchase any of these shares. Par's ownership percentage declined from 70 to 56%. Calculate the gain or loss that would be charged or credited to consolidated shareholders' equity as a result of this transaction (Input all amounts as positive values. Round intermediate calculations and final answer to nearest dollar amount. Omit $ sign in your response.) (Click to select) $ Mc Graw Prey 1 of 2 HE Next > vo Inventories Land Plant and equipment Accumulated depreciation Investment in Star common shares 85,560 55,000 37,000 77,000 420,000 770,000 (187,000) (307,000) 218,400 $ 727,960 $ 688,700 $ 94,800 $ 187,000 8,700 11,400 57,000 450,000 160,000 174, 460 273,300 $ 727,960 $ 688,700 Accounts payable Accrued liabilities Preferred shares Common shares Retained earnings ped ok int RETAINED EARNINGS STATEMENTS For the Year Ended December 31, Year 12 Par Star Balance, January 1 $184,460 $318,300 Net income (loss) 21,000 (18,000) 205,460 300,300 Dividends (31,000) (27,000) Balance, December 31 $174,460 $273,300 ences Other Information On January 1. Year 5, the balance sheet of Star showed the following shareholders' equity: $8 cumulative preferred shares, see shares issued Common shares, 2,000 shares issued Deficit (Note 1) $ 57,000 160,000 (87,000) $130,000 Note 1: Dividends on preferred shares are two years in arrears On this date, Par acquired 1,400 common shares of Star for a cash payment of $218,400, The fair values of Star's identifiable net assets differed from carrying amounts only with respect to the following Carrying Fair value Prey 1 of 2 !!! The fair values of Star's identifiable net assets differed from carrying amounts only with respect to the following: Fair value $ Accounts receivable Inventory Plant Long-term liabilities Carrying amount 41, ese 51,000 530,000 312,000 $ 39,000 58 , 580,000 332,000 The plant had an estimated remaining useful life of five years on this date, and the long-term liabilities had a maturity date of December 30, Year 12 Any goodwill is to be tested annually for impairment. . Both Par and Star make substantial sales to each other at an intercompany selling price that yields the same gross profit as the sales they make to unrelated customers. Intercompany sales in Year 12 were as follows: ces Par to Star Star to Par $ 260,000 351,000 During Year 12. Par billed Star $2,000 per month in management fees. At year-end, Star had paid for all months except for December The January 1 Year 12, inventories of the two companies contained unrealized intercompany profits as follows: Inventory of Par Inventory of Star $ 21,000 20,000 The December 31, Year 12, inventories of the two companies contained unrealized intercompany profits as follows: Inventory of Par Inventory of Star $ 42,000 44,800 . On July 1 Year 7 Star sold equipment to Par for $66 000 The eauinment had a carrving amount in the records of Star of Prey 1 of 2 Next > On July 1, Year 7. Star sold equipment to Par for $66,000. The equipment had a carrying amount in the records of Star of $46,000 on this date and an estimated remaining useful life of five years. Goodwill impairment losses were recorded as follows: Year 7. $78,000; Year 9, $48,570; and Year 12, $20,060. Assume a 40% corporate tax rate. Par has accounted for its investment in Star by the cost method All dividends in arrears were paid by December 31, Year 11. Required: (a) Prepare, with all necessary calculations, the following: (i) Year 12 consolidated retained earnings statement. (Input all amounts as positive values. Omit $ sign in your response.) Par Corp Consolidated Retained Earnings Statement Year Ended December 31, Year 12 Balance January 1 $ Net loss Dividends Balance December 31 $ (ii) Consolidated balance sheet as at December 31, Year 12. Par Corp. Consolidated Balance Sheet as at December 31, Year 12 Assets $ Prey 1 of 2 HE Next > 1 28 points Skipped $ 0 Liabilities and Equity eBook Print o References $ 0 (b) How would the return on equity attributable to Par's shareholders for Year 12 change if Star's preferred shares were non- cumulative instead of cumulative? O No Change O Change (c) On January 1, Year 13, Star issued common shares for $100,000 in cash. Because Par did not purchase any of these shares. Par's ownership percentage declined from 70 to 56%. Calculate the gain or loss that would be charged or credited to consolidated shareholders' equity as a result of this transaction (Input all amounts as positive values. Round intermediate calculations and final answer to nearest dollar amount. Omit $ sign in your response.) (Click to select) $ Mc Graw Prey 1 of 2 HE Next >