On January $2,$ Year $4,$ Brady Ltd$.,$ a private company, purchased $80\%$ of the outstanding shares of Partridge Ltd$.$ for $$5,120,000.$ Partridge$$s statement of financial position and the fair values of its identifiable assets and liabilities for that date were as follows:

Carrying Amount Fair Value

Plant and equipment $($net$)$ $ $5,000,000$ $ $5,000,000$

Patents $($net$)1,500,0002,100,000$

Inventory $2,500,0002,800,000$

Accounts receivable $2,000,0002,000,000$

Cash $600,000600,000$

$ $11,600,000$

Ordinary shares $ $2,101,000$

Retained earnings $3,100,000$

$10\%$ bonds payable $3,500,0003,900,000$

Accounts payable $2,899,0002,899,000$

$ $11,600,000$

The patents had a remaining useful life of ten years on the acquisition date.

The bonds were issued on January $1,$ Year $2,$ and mature on December $31,$ Year $13.$ Goodwill impairment losses were as follows:

Year $4$: $$55,000$

Year $6$: $$40,000$

Partridge declared and paid dividends of $$150,000$ in Year $6.$

Brady uses ASPE for reporting purposes. It elected to use the straight$-$line method to amortize any premium or discount on bonds payable.

On December $31,$ Year $6,$ the financial statements of the two companies were as follows:

STATEMENT OF FINANCIAL POSITION

Brady Partridge

Plant and equipment $($net$)$ $ $9,000,000$ $ $6,000,000$

Patents $($net$)800,000$

Investment in Partridge Ltd$.($equity method$)5,475,200$

Inventory $5,600,0002,400,000$

Accounts receivable $1,500,0001,800,000$

Cash $500,000700,000$

$ $22,075,200$ $ $11,700,000$

Ordinary shares $ $5,500,000$ $ $2,101,000$

Retained earnings $6,462,0003,999,000$

Bonds payable $4,500,0003,500,000$

Accounts payable $5,613,2002,100,000$

$ $22,075,200$ $ $11,700,000$

INCOME STATEMENTS

Brady Partridge

Sales $ $10,500,000$ $ $5,500,000$

Equity method income $144,000$

$10,644,0005,500,000$

Cost of goods purchased $7,030,0002,990,000$

Change in inventory $80,000160,000$

Depreciation expense $1,000,000410,000$

Patent amortization expense $200,000$

Interest expense $530,000350,000$

Other expenses $780,000950,000$

Income taxes $700,000200,000$

$10,120,0005,260,000$

Profit $ $524,000$ $ $240,000$