On January $1,$ Year $5,$ Par Co$.$ purchased $85\%$ of the outstanding common shares of Sub Co$.$ for $$9,000$ in cash. On that date, the shareholders$$ equity of Sub consisted of $$2,000$ in common shares and $$6,000$ in retained earnings. For the year ended December $31,$ Year $10,$ the income statements for Par and Sub were as follows: Par Sub Sales $ $24,800$ $ $12,000$ Other Income $4,000900$ Cost of goods sold $18,0008,200$ Depreciation expense $3,4001,800$ Other expenses $3,0001,200$ Income tax expense $1,200400$ Net income $ $3,200$ $ $1,300$ At December $31,$ Year $10,$ the condensed balance sheets for the two companies were as follows: Par Sub Cash and accounts receivables $ $13,000$ $ $7,000$ Inventory $2,0001,800$ Property, plant and equipment $19,60017,400$ Investment in Sub $9,000$ Total assets $ $43,600$ $ $26,200$ Liabilities $ $26,400$ $ $13,800$ Common shares $4,0002,000$ Retained earnings $13,20010,400$ Total liabilities and shareholders$$ equity $ $43,600$ $ $26,200$Other information $1.$ On January $1,$ Year $5,$ Sub had inventory with a fair value that was $$90$ greater than its carrying value. $2.$ On January $1,$ Year $5,$ Sub had equipment with a fair value that was $$200$ higher than its carrying value. The equipment had an estimated remaining useful life of $10$ years. $3.$ Each year, goodwill is evaluated to determine if there was an impairment loss. Goodwill had a recoverable value of $$2,080$ at December $31,$ Year $9$ and $$2,000$ at December $31,$ Year $10.4.$ During Year $10,$ Sub sold merchandise to Par for $$550,60\%$ of which remains in Par$$s inventory at December $31,$ Year $10.$ On December $31,$ Year $9,$ the inventory of Par contained $$100$ of merchandise purchased from Sub. Sub earns a gross margin of $30\%$ on its sales. $5.$ On January $2,$ Year $7,$ Sub sold land to Par for $$1,000.$ Sub purchased the land on January $1,$ Year $3$ for $$700.$ In Year $10,$ Par sold $30\%$ of this land to an outsider. $6.$ During Year $10,$ Par declared and paid dividends of $$2,500,$ while Sub declared and paid dividends of $$800.7.$ Par accounts for its investment in Sub using the cost method. $8.$ Both companies pay income tax at the rate of $40\%.$ Required a$.$ Calculate the consolidated net income for Year $10.$ b$.$ Calculate the consolidated retained earnings at January $1,$ Year $10.$ c$.$ Prepare the consolidated financial statements for the year ended December $31,$ Year $10.$ d$.$ Prepare the working paper eliminating journal entries for the intercompany sale of inventory for Year $10.$ e$.$ If Par had used the Identifiable Net Asset method $($see chapter $4),$ briefly explain whether total shareholders$$ equity for Year $10$ would increase, decrease, or not change. Hints: Goodwill $=$ $$2,298$; AD left Dec. $31,$ Year $10=$ $$2,080$; Consolidated NI $=$ $$3,733$; Total consolidated assets $$62,695$