1) On January 2, 2021, Paro Corporation acquired 70 percent interest in Saro Corporation for $2,800,000....

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1) On January 2, 2021, Paro Corporation acquired 70 percent interest in Saro Corporation for $2,800,000. Paro's capital stock and retained earnings were $7,200,000 and $3,200,000 respectively, while Saro's capital stock and retained earnings were $2,000,000 and $400,000 respectively. Net income and dividends for 2021 for the affiliated companies were as follows: (in thousands): Net income Dividends declared Dividends payable December 31, 2021 a. Capital stock b. Goodwill Required: Calculate the amounts that should appear in the consolidated balance sheet on December 31, 2021 for the following items (Provide explanation as needed): Sales Income from Solo Cost of goods sold Operating expenses Paro $1,200 c. Noncontrolling interest d. Dividends payable Polo $3,200 384 1,800 800 720 360 (10 Marks) 2) At December 31, 2021, The Comparative income statements of Polo Corporation and Solo Corporation show the following (in thousands): Solo $1,300 400 400 Saro $360 200 100 Additional information 1. Polo Corporation acquired 80 percent of Solo for $1,600,000 on January 1, 2019, when Solo's Stockholders' equity at book value was $1,400,000. 2. The excess of the cost Polo's investment in Solo over book value acquired was allocated $60,000 to undervalued inventories that were sold in 2019, $80,000 to undervalued equipment with a four-year remaining useful life, and the remainder to goodwill. Required: Prepare a consolidated income statement for Polo Corporation and Subsidiary for the year ended December 31, 2021. (14 marks) 1) On January 2, 2021, Paro Corporation acquired 70 percent interest in Saro Corporation for $2,800,000. Paro's capital stock and retained earnings were $7,200,000 and $3,200,000 respectively, while Saro's capital stock and retained earnings were $2,000,000 and $400,000 respectively. Net income and dividends for 2021 for the affiliated companies were as follows: (in thousands): Net income Dividends declared Dividends payable December 31, 2021 a. Capital stock b. Goodwill Required: Calculate the amounts that should appear in the consolidated balance sheet on December 31, 2021 for the following items (Provide explanation as needed): Sales Income from Solo Cost of goods sold Operating expenses Paro $1,200 c. Noncontrolling interest d. Dividends payable Polo $3,200 384 1,800 800 720 360 (10 Marks) 2) At December 31, 2021, The Comparative income statements of Polo Corporation and Solo Corporation show the following (in thousands): Solo $1,300 400 400 Saro $360 200 100 Additional information 1. Polo Corporation acquired 80 percent of Solo for $1,600,000 on January 1, 2019, when Solo's Stockholders' equity at book value was $1,400,000. 2. The excess of the cost Polo's investment in Solo over book value acquired was allocated $60,000 to undervalued inventories that were sold in 2019, $80,000 to undervalued equipment with a four-year remaining useful life, and the remainder to goodwill. Required: Prepare a consolidated income statement for Polo Corporation and Subsidiary for the year ended December 31, 2021. (14 marks)