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On January 1 Year 4. Cyrus Inc. paid 5914,000 in cash to acquire all of the ordinary shares of Faze Company On that date. Falls retained earnings were $200,000. All of Fazli's assets and abilities had fair values equal to carrying amounts except for an investment in bonds, which was worth $12.988 more than carrying amount and will mature on December 31 Year 8 The recoverable amount for goodwil was $200.000 at the end of Years 4 and 5 In Year 4 Cyrus reported net income from its own operations (exclusive of any income from Fazil) of $125,000 and declared no dividends In Year 4. Fazli reported net income of $80,000 and paid a $30,000 cash dividend Cyrus uses the cost method to report its Investment in Fazli and uses the effective interest method to amortize premiums or discounts on investment in bonds. The amortization of the acquisition differential pertaining to the investment in bonds was $2351 in Year 4 and $2.468 in Year 5 The financial statements for Cyrus and Fall for the year ended December 31, Year 5 were as follows 5 5 stvenues and Investment income Expenses Profit Prtained earnings. 1/3/car Profit Dividends onid ws 928,00 (674,000 255,000 814.000 254,000 (109,00 az 5 $44.000 (210,000 5 134,000 5 250.000 134.000 6.COD 5
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