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Paper Corp. purchased $70\%$ of the outstanding shares of Sand Ltd$.$ on January $1,$ Year $2,$ at a cost of $$103,110.$ Paper has always used the equity method to account for its investments. On January $1,$ Year $2,$ Sand had common shares of $$50,000$ and retained earnings of $$35,600,$ and fair values were equal to carrying amounts for all its net assets, except inventory $($fair value was $$6,600$ less than carrying amount$)$ and equipment $($fair value was $$19,500$ greater than carrying amount$).$ The equipment, which is used for research, had an estimated remaining life of six years on January $1,$ Year $2.$

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The following are the financial statements of Paper Corp. and its subsidiary Sand Ltd$.$ as at December $31,$ Year $5$:

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BALANCE SHEETSAt December $31,$ Year $5$Paper$$SandCash$$$$$29,000$Accounts receivable$51,00037,600$Note receivable$34,500$Inventory$97,20053,500$Equipment $($net$)355,00085,500$Land$212,00049,000$Investment in Sand$148,715$$$863,915$$$289,100$Bank indebtedness$$233,155$$$$Accounts payable$88,00071,600$Notes payable$34,500$Common shares$150,00050,000$Retained earnings$358,260167,500$$$863,915$$$289,100$

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INCOME STATEMENTSFor the year ended December $31,$ Year $5$Paper$$SandSales$$874,000$$$491,700$Management fee revenue$33,600$Equity method income from Sand$2,961$Interest income$3,450$Gain on sale of land$6,500910,561501,650$Cost of sales$524,400327,800$Research and development expenses$49,50019,600$Interest expense$25,200$Miscellaneous expenses$125,00041,200$Income taxes$74,20045,220798,300433,820$Net income$$112,261$$$67,830$

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Additional Information

During Year $5,$ Sand made a cash payment of $$2,800$ per month to Paper for management fees, which is included in Sand$$s Miscellaneous expenses.

During Year $5,$ Paper made intercompany sales of $$145,000$ to Sand. The December $31,$ Year $5,$ inventory of Sand contained goods purchased from Paper amounting to $$43,500.$ These sales had a gross profit of $35\%.$

On April $1,$ Year $5,$ Paper acquired land from Sand for $$34,500.$ This land had been recorded on Sand$$s books at a carrying amount of $$28,000.$ Paper paid for the land by signing a $$34,500$ note payable to Sand, bearing yearly interest at $10\%.$ Interest for Year $5$ was paid by Paper in cash on December $31,$ Year $5.$ This land was still being held by Paper on December $31,$ Year $5.$

The value of consolidated goodwill remained unchanged from January $1,$ Year $2,$ to July Year $5.$ On July $1,$ Year $5,$ a valuation was performed, indicating that the recoverable amount of consolidated goodwill was $$5,400.$

During the year ended December $31,$ Year $5,$ Paper paid dividends of $$80,000$ and Sand paid dividends of $$20,000.$

Sand and Paper pay taxes at a $40\%$ rate. Assume that none of the gains or losses were capital gains or losses. Required:

$($a$)$ Prepare, in good form, a calculation of goodwill and any undepleted acquisition differential as of December $31,$ Year $5.($Negative amounts should be indicated by a minus sign. Leave no cells blank $-$ be certain to enter $"0"$ wherever required. Omit $ sign in your response.$)$

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$$Balance$$Changes to$$Balance$$January $1,$ Year $2$Year $2-4$Year $5$Dec$.31,$ Year $5$Inventory$$$ $$$ $$$ $$$ Equipment$$Goodwill$$$ $$$ $$$ $$$

$($b$)$ Prepare Paper$$s consolidated income statement for the year ended December $31,$ Year $5,$ with expenses classified by function. $($Round your answer to nearest whole dollar.$)$

$($c$)$ Calculate the following balances that would appear on Paper$$s consolidated balance sheet as at December $31,$ Year $5$: $($Leave no cells blank $-$ be certain to enter $"0"$ wherever required. Omit $ sign in your response.$)$

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$($i$)$ Inventory$$ $

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$($ii$)$ Land$$ $

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$($iii$)$ Notes payable$$ $

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$($iv$)$ Non$-$controlling interest$$ $

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$($v$)$ Common shares$$ $

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$($d$)$ Assume that an independent business valuator valued the non$-$controlling interest at $$42,825$ at the date of acquisition. Calculate goodwill impairment loss and profit attributable to non$-$controlling interest for the year ended December $31,$ Year $5.($Omit $ sign in your response.$)$

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$$Goodwill impairment loss$$$ Profit attributable to non$-$controlling interest$$$

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