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 $4.4 million consisting of:
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$
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Share Capital
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3 000 000
|
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Retained Earnings
|
1 400 000
|
|
4 400 000
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As at 30 June 2012 the financial statements of the two companies are as follows:
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Anderson Ltd
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Arthur Ltd
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|
($ 000)
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($ 000)
|
|
Detailed reconciliation of opening and closing retained earnings
|
|
|
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Sales Revenue
|
800
|
200
|
|
Cost of Goods Sold
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(200)
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(80)
|
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Other Expenses
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(120)
|
(60)
|
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Other Revenue
|
310
|
85
|
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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)
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(80)
|
|
Retained Earnings - 30 June 2012
|
2 220
|
1 630
|
|
|
|
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Statement of Financial Position
|
|
|
|
Shareholders Equity
|
|
|
|
Retained Earnings
|
2 220
|
1 630
|
|
Share Capital
|
8 000
|
3 000
|
|
Current Liabilities
|
|
|
|
Accounts Payable
|
120
|
80
|
|
Non-current Liabilities
|
|
|
|
Loans
|
1 200
|
500
|
|
11 540
|
5 210
|
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Current Assets
|
|
|
|
Cash
|
300
|
50
|
|
Accounts Receivable
|
500
|
350
|
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Inventory
|
1 000
|
600
|
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Non-current Assets
|
|
|
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Land
|
2 800
|
2 210
|
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Plant
|
2 940
|
2 000
|
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Investment in Arthur Ltd
|
4 000
|
-
|
|
11 540
|
5 210
|
Additional Information
- The Management of Anderson Ltd measures any non-controlling interest in Arthur Ltd at fair value.
- During the 2012 financial year Arthur Ltd sells $45 000 of inventory to Anderson Ltd. At year end Anderson has sold this inventory.
- The tax rate is 30 percent.
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.