On January 2, Year 4, Brady Ltd., a private company, purchased 80% of the outstanding shares of Partridge Ltd. for $4,520,000. Partridge's statement of financial position and the fair values of its identifiable assets and liabilities for that date were as follows: Plant and equipment (net) Patents (net) Inventory Accounts receivable Cash Carrying Amount $ 4,700,000 1,200,000 2,200,000 1,700,000 540,000 $10,340,000 $ 2,041,000 2,740,000 3,200,000 2,359,000 $10, 340,000 Fair Value $4,700,000 1,740,000 2,440,000 1,700,000 540,000 Ordinary shares Retained earnings 10% bonds payable Accounts payable 3,540,000 2,359,000 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: $37,000 Year 6: $23,500 Partridge declared and paid dividends of $120,000 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 $ 8,400,000 Partridge $ 5,400,000 740,000 Plant and equipment (net) Patents (net) Investment in Partridge Ltd. (equity method) Inventory Accounts receivable Cash 4,806, 800 5,000,000 1,200,000 440,000 $19,846,800 $ 5,200,000 6,402,000 4,200,000 4,044,800 $19,846,800 Ordinary shares Retained earnings Bonds payable Accounts payable 2,100,000 1,500,000 640,000 $10,380,000 $ 2,041,000 3,459,000 3,200,000 1,680,000 $10,380,000 INCOME STATEMENTS Partridge $5,200,000 Sales Equity method income Brady $10, 200,000 138,000 10,338,000 6,970,000 74,000 940,000 Cost of goods purchased Change in inventory Depreciation expense Patent amortization expense Interest expense Other expenses Income taxes 500,000 720,000 640,000 9,844,000 494,000 5,200,000 2,930,000 130,000 404,000 140,000 320,000 890,000 170,000 4,984,000 $ 216,000 Profit Required: (a) Prepare consolidated financial statements on December 31, Year 6. (Input all values as positive numbers.) Required: (a) Prepare consolidated financial statements on December 31, Year 6. (Input all values as positive numbers.) Brady Ltd. Consolidated Income Statement for the Year Ended December 31, Year 6 Attributable to: Brady's shareholders Non-controlling interest Brady Ltd. Consolidated Statement of Financial Position December 31, Year 6 Assets Liabilities and Equity