The following are the Year 9 income statements of Kent Corp. and Laurier Enterprises.

Additional Information:

• Kent acquired its 40% interest in the common shares of Laurier in Year 3 at a cost of $843,000 and uses the cost method to account for its investment for internal record keeping.

• The acquisition differential amortization schedule pertaining to Kent's 40% interest showed the following write-off for Year 9:

Buildings                                                                                                              $18,000

Goodwill impairment loss                                                                                  22,000

                                                                                                                                40,000

Long-term liabilities                                                                                             21,500

Acquisition-differential amortization and impairment-Year q                     $18,500

• Depreciation expense and goodwill impairment loss are included with selling and administrative expenses.

• In Year 9, rent amounting to $30,000 was paid by Laurier to Kent. Kent has recorded this as other income.

• In Year 6, Kent sold land to Laurier and recorded a profit of $93,000 on the transaction. During Year 9, Laurier sold 30% of the land to an unrelated land development company.

• During Year 9, Laurier paid dividends totalling $107,000.

• It has been established that Kent's 40% interest would not be considered control in accordance withiFRS.

• Assume a 40% tax rate.

Required:

(a) Assume that Laurier is a joint venture that is owned by Kent and two other unrelated venturers. Also assume that Kent acquired its interest after Laurier's initial formation, and that the acquisition differentials are therefore valid. Prepare the income statement of Kent for Year 9 using the equity method. (Show all calculations.)

(b) Assume that Laurier is a joint operation. Prepare Kent's income statement for Year 9 using proportionately adjusted financial statements. (Show all calculations.)

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INCOME STATEMENTS For the year ended December 31, Year 9 Laurier Kent $1,380,000 $3,180,000 Sales Other income Gain on sale of land 218,000 88,000 118,000 3,398,000 1,586,000 Cost of sales Selling and administrative expenses Other expenses Income tax 1,445,000 605,000 518,000 318,000 139,000 109,000 418,000 2,490,000 $ 908,000 168,000 1,230,000 $ 356,000 Net income