On January 1, 20X6, Parent Ltd. purchased 100% of the outstanding voting common shares of Sub Ltd. for $ 2,800,000. Any revaluation arising from the purchase of depreciable assets is to be amortized over 10 years.

During 20X6, the following events occurred:

1. No dividends were paid on the shares by either company.

2. Sub Ltd. sold inventory costing $ 494,000 to Parent Ltd. for $ 682,000, 30% of which was not sold at year- end.

3. During 20X6, all of the current assets that had a fair market value greater than carrying value were sold to outside parties or were collected.

4. Parent Ltd. has made no entries in the investment in Sub Ltd. account following the acquisition.

Condensed trial balance information for Sub Ltd. and Parent Ltd. is shown below.

Required

Prepare a consolidated statement of comprehensive income and retained earnings and a consolidated statement of financial position for Parent Ltd. for the year ended December 31, 20X6.

Trail balance 

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Parent Ltd. Pre-closing trial balance December 31, 20X6 275,000 384,000 129,000 860,000 730,000 862,000 140,000 2,800,000 6,180,000 Accounts receivable, net Marketable securities Inventory Buildings and equipment, net Goodwill Investment in Sub Ltd Not related to Sub Ltd. Current liabilities Bonds payable Common shares Retained eamings Sales Cost of goods sold Depreciation Other expenses Bond interest income 395,000 685,000 1,100,000 3,757,000 1,930,000 1,463,000) (27,000) (203,450) 6,450 $6,180,000