Assume that Par Corp. elects to account for the non-controlling interest in Star Inc. using the fair

Required:(a) Prepare, with all necessary calculations, the following:(i) Year 12 consolidated retained earnings statement(ii) Consolidated balance sheet as at December 31, Year 12(b) How would the return on equity attributable to Par’s shareholders for Year 12change if Star’s preferred shares were non-cumulative instead of cumulative?(c) On January 1, Year 13, Star issued common shares for $100,000 in cash.Because Par did not purchase any of these shares, Par’s ownership percentagedeclined from 70 to 56%.Calculate the gain or loss that would be charged or credited to consolidatedshareholders’ equity as a result of this transaction.Amendments:Assume that Par Corp. elects to account for the non-controlling interest in Star Inc. using the fairvalue enterprise method.Change the first sentence after “Note 1” on page 474 to read, “On this date, Par acquired 1,400common 1,500 ordinary shares of Star for a cash payment of $280,000.”Change the eighth bullet point on page 474 to read “Assume a 40 30% corporate tax rate.”Change requirement (c) on page 475 to read,“On January 1, Year 13, Star issued common ordinary shares for $100,000 in cash. Because Pardid not purchase any of these shares, Par’s ownership percentage declined from 70 75 to 56 60%.Calculate the gain or loss that would be charged or credited to consolidated shareholders’ equityas a result of this transaction.”For part (c), prepare the journal entry that Par Corp. would use to reflect the change in ownershipinterest, assuming that Par Corp. uses the equity method to account for its investment in Star Inc.Carry two decimals throughout the calculations, and round the numbers only at the end of thecalculations required to prepare the consolidated statement of financial position.

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