"Problem $5-19$

LO$2,$

The following financial statements were prepared on December $31,$ Year $6.$

BALANCE SHEET

RETAINED EARNINGS STATEMENT

Balance, January $1$

Net income

Dividends

Balance, December $31$

$$890,000$

$697,000$

$1,587,000$

$290,000$

$=$$$1,297,000$

Additional Information

Pearl purchased $80\%$ of the outstanding voting shares of Silver for $$3,300,000$ on July $1,$ Year $2,$ at which time Silver's retained earnings were $$445,000,$ and accumulated depreciation was $$69,000.$ The acquisition differential on this date was allocated as follows:

$20\%$ to undervalued inventory

$40\%$ to equipment $-$ remaining useful life $8$ years

Balance to goodwill

During Year $3,$ a goodwill impairment loss of $$79,000$ was recognized, and an impairment test conducted as at December $31,$ Year $6,$ indicated that a further loss of $$29,000$ had occurred.

Amortization expense is grouped with cost of goods sold and impairment losses are grouped with administrative expenses.

Silver owes Pearl $$84,000$ on December $31,$ Year $6.$

Required

$($a$)$ Prepare consolidated financial statements on December $31,$ Year $6.$

$($b$)$ Calculate goodwill impairment loss and noncontrolling interest on the consolidated income statement for the year ended December $31,$ Year $6,$ under the identifiable net assets method.

Page $296$

$($c$)$ Calculate goodwill and noncontrolling interest on the consolidated balance sheet at December $31,$ Year $6,$ under the identifiable net assets method.

$*($d$)$ Prepare the consolidated financial statements using the worksheet approach.