P4-2 Summer Corp. owns all the shares of Keira Ltd. The shares were acquired on July 1, 2011, by Summer at a cost of $60,000. At acquisition date, the capital of Keira consisted of 44,000 common shares at $1. There were retained earnings of $4,000. All the identifiable assets and liabilities of Keira were recorded at amounts equal to fair value, except for:

The land was sold on June 1, 2012, for $94,000. The machinery had a further five-year life. The inventory was all sold by December 31, 2011. Keira has not recorded any goodwill at July 1, 2011. Goodwill has not been impaired. The trial balances of the two entities at June 30, 2013, are shown below.
Additional information:
1. Intragroup sales of inventory for the year ended June 30, 2013, from Summer to Keira were $14,000 and from Keira to Summer were $3,000.
2. Intragroup inventory on hand:
(a) at July 1, 2012: held by Keira, purchased from Summer at a profit of $400.
(b) at June 30, 2013: held by Summer, purchased from Keira at a profit of $200.
3. Intragroup machinery on hand at June 30, 2013:
(a) Summer: purchased from Keira on July 1, 2012, for $10,000 at a profit to Keira of $500. Depreciation rate is straight line over 10 years.
(b) Keira: purchased from Summer on January 1, 2012, for $12,000, at a loss to Summer of $500. Depreciation rate is 20% p.a. on cost.
4. Summer advanced $5,000 to Keira on January 1, 2013. Summer charges 5% interest annually. Kiera had not yet paid the interest or the principal.
5. Keira paid a royalty fee of $1,000 to Summer during 2013.
6. The income tax rate is 30%

Required
Prepare consolidated financial statements (excluding the Statement of Cash Flows) of Summer and Keira as at
June 30, 2013.

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Inventory Land Machinery (cost $100,000) Carrying amount $12,000 60,000 80,000 Fair value $15,000 70,000 82,000 Trial Balances as at June 30, 2013 Summer Keira $64,000 32,000 21,400 $44,000 21,000 17,000 Share capital Retained earnings (1/7/12) Current liabilities Machinery Investment in Keira Inventory Receivables Revenue Cost of sales Selling expenses Administrative expenses Depreciation/amortization expenses Income tax expense Accumulated depreciation-machinery Deferred tax assets Plant (net of depreciation) Gain/loss on sale of machinery $38,000 60,000 19,000 5,500 $ 71,500 16,400 8,300 43,000 52,000 20,600 3,200 5,300 1,200 7,400 30,900 6,000 2,700 2,600 4,700 12,200 22,300 5,400 8,000 6,300 7,400 500 1,000 $173,600 $173,600 $156,800 $156,800