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On 1 July 2010 Anderson Ltd acquires 70 percent of the equity capital of Arthur Ltd at a cost of $4 million. At the date of acquisition all assets of Arthur are fairly stated and the total shareholder funds of Arthur Ltd are $4.4 million consisting of:
$
Share Capital
3 000 000
Retained Earnings
1 400 000
4 400 000
As at 30 June 2012 the financial statements of the two companies are as follows:
Anderson Ltd
Arthur Ltd
($ 000)
Detailed reconciliation of opening and closing retained earnings
Sales Revenue
800
200
Cost of Goods Sold
(200)
(80)
Other Expenses
(120)
(60)
Other Revenue
310
85
Profit
790
145
Tax
170
35
Profit After Tax
620
110
Retained Earnings - 30 June 2011
2 000
1 600
2 620
1 710
Dividends Paid
(400)
Retained Earnings - 30 June 2012
2 220
1 630
Statement of Financial Position
Shareholders Equity
8 000
3 000
Current Liabilities
Accounts Payable
120
80
Non-current Liabilities
Loans
1 200
500
11 540
5 210
Current Assets
Cash
300
50
Accounts Receivable
350
Inventory
1 000
600
Non-current Assets
Land
2 800
2 210
Plant
2 940
Investment in Arthur Ltd
4 000
-
Additional Information
Required: Showing all workings, including a consolidation worksheet and journal entries, prepare the consolidated statement of financial position, consolidated statement of comprehensive income and consolidated statement of changes in equity for Anderson Ltd and its controlled entity.
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