On December 31, 20X2, Pan Co. purchased 70% of the outstanding common shares of San Co. for $1,050,000 in cash. On that date, the shareholders' equity of San totalled $800,000 and consisted of $500,000 in common shares and $300,000 in retained earnings.

For the year ended December 31, 20X6, the statements of comprehensive income for Pan and San were as follows:

Pan San

Sales $4,000,000 $2,500,000

Interest and investment income 250,000 50,000

4,250,000 2,550,000

Cost of sales 2,900,000 1,750,000

Depreciation expense 400,000 315,000

Other expenses 585,000 315,000

Income tax expense 110,000 51,000

Net income $255,000 $119,000

As at December 31, 20X6, the statements of financial position for the two companies were as follows:

	Pan	San
Cash	$ 125,000	$ 150,000
Accounts receivables	400,000	225,000
Inventory	750,000	425,000
Land	675,000	720,000
Building	675,000	500,000
Equipment	825,000	730,000
Investment in San	1,050,000	0
	$4,500,000	$2,750,000
Current liabilities	$1,000,000	$ 450,000
Long-term debt	1,500,000	900,000
Common shares	1,050,000	500,000
Retained earnings	950,000	900,000
	$4,500,000	$2,750,000

Other information

1. On December 31, 20X2, San had a building with a fair value that was $140,000 greater than its carrying value. The building had an estimated remaining useful life of 14 years and is being amortized on a straight-line basis.

2. On December 31, 20X2, San had inventory with a fair value that was $40,000 more than its carrying value. San uses the first in, first out (FIFO) method of inventory valuation.

3. San is a cash-generating unit (CGU). Pan determined that the CGU suffered an impairment loss of $250,000 in 20X4 and a further $30,000 in 20X6. The impairment losses were allocated entirely to goodwill in both years.

4. On January 2, 20X5, San sold equipment to Pan for $480,000. When San originally purchased the equipment on January 1, 20X3, for $500,000, it was estimated that its service life would be 10 years with no salvage value. There was no change in the estimated service life or salvage value at the time of the intercompany sale.

5. During 20X6, Pan sold merchandise to San for $500,000, a price that includes a gross profit of $125,000. San resold 40% of this inventory during 20X6. The other 60% remains in San's year-end inventory. On December 31, 20X5, the inventories of San contained merchandise purchased from Pan on which Pan had recognized a gross profit in the amount of $50,000.

6. During 20X6, San sold merchandise to Pan for $200,000, a price that includes a gross profit of $90,000. Pan resold 30% of this inventory during 20X6. The other 70% remains in Pan's year-end inventory.

7. During 20X6, Pan declared and paid dividends of $200,000 while San declared and paid dividends of $80,000.

8. Both companies' tax rate is 30%.

9. Pan uses the fair value enterprise (FVE) method to account for the non-controlling interest on the date of acquisition.

Required:

a) Allocate the purchase price at acquisition and prepare an acquisition differential amortization schedule.

b) A consolidated statement of comprehensive income for the year ended December 31, 20X6 using the worksheet approach.

c) A consolidated statement of financial position as at December 31, 20X6 using the worksheet approach.