Paper Corp. purchased 70% of the outstanding shares of Sand Ltd. on January 1, Year 2, at a cost of $84,000. Paper has always used the equity method to account for its investments. On January 1, Year 2, Sand had common shares of $50,000 and retained earnings of $30,000, and fair values were equal to carrying amounts for all its net assets, except inventory (fair value was $9,000 less than carrying amount) and equipment (fair value was $24,000 greater than carrying amount). The equipment, which is used for research, had an estimated remaining life of 6 years on January 1, Year 2. The following are the financial statements of Paper Corp. and its subsidiary Sand Ltd. as at December 31, Year 5:

Additional Information
€¢ During Year 5, Sand made a cash payment of $2,000 per month to Paper for management fees, which is included in Sand€™s €œMiscellaneous expenses.€
€¢ During Year 5, Paper made intercompany sales of $100,000 to Sand. The December 31, Year 5, inventory of Sand contained goods purchased from Paper amounting to $30,000. These sales had a gross profit of 35%.
€¢ On April 1, Year 5, Paper acquired land from Sand for $40,000. This land had been recorded on Sand€™s books at a carrying amount of $20,000. Paper paid for the land by signing a $40,000 note payable to Sand, bearing yearly interest at 8%. Interest for Year 5 was paid by Paper in cash on December 31, Year 5.
This land was still being held by Paper on December 31, Year 5.
€¢ The fair value of consolidated goodwill remained unchanged from January 1, Year 5 to July Year 5. On July 1, Year 5, a valuation was performed, indicating that the recoverable amount of consolidated goodwill was $3,500.
€¢ During the year ended December 31, Year 5, Paper paid dividends of $80,000 and Sand paid dividends of $20,000.
€¢ Sand and Paper pay taxes at a 40% rate. Assume that none of the gains or losses were capital gains or losses.
Required:
(a) Prepare, in good form, a calculation of goodwill and any unamortized acquisition differential as of December 31, Year 5.
(b) Prepare Paper€™s consolidated income statement for the year ended December 31, Year 5, with expenses classified by function.
(c) Calculate the following balances that would appear on Paper€™s consolidated balance sheet as at December 31, Year 5:
(i) Inventory
(ii) Land
(iii) Notes payable
(iv) Non-controlling interest
(v) Common shares
d) Assume that an independent business valuator valued the non-controlling interest at $30,000 at the date of acquisition. Calculate goodwill impairment loss and profit attributable to non-controlling interest for the year ended December 31, Year 5.

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BALANCE SHEETS at December 31, Year 5 Paper 36,000 66,000 Sand Cash Accounts receivable Note receivable Inventory Equipment, net Land Investment in Sand 10,000 30,000 40,000 44,000 76,000 150,000 30,000 220,000 112,350 $584,350 $230,000 Bank indebtedness Accounts payable Notes payable Common shares Retained earnings S 90,000 $ 50,000 40,000 150,000 60,000 50,000 254,350 120,000 $584,350 $230,000 INCOME STATEMENTS for the Year Ended December 31, Year 5 Paper $798,000 $300,000 an Sales Management fee revenue Investment income from Sand Interest income Gain on sale of land 24,000 1,500 3,600 20,000 823.500 323,600 480,000 200,000 12,000 Cost of sales Research and development expenses Interest expense Miscellaneous expenses Income taxes 40,000 10,000 106,000 31,600 32,000 716.000 275,600 $107,500 48,000 80,000 Net income