Exercise 22.7 ★ ★ ★ CONSOLIDATED WORKSHEET, CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME On 1 April 2015, Abby Ltd acquired all the issued ordinary shares (cum div.) of Ella Ltd for $100 000. At that date, relevant balances in the records of Ella Ltd were: Share capital $80 000 Asset revaluation surplus 5 000 Retained earnings 5 000 Dividend payable 4 000 All the identifi able assets and liabilities of Ella Ltd were recorded at fair values except for the following: Carrying amount Fair value Inventory Plant (cost $80 000) $10 000 50 000 $12 000 53 000 Immediately after the acquisition of its shares by Abby Ltd, Ella Ltd revalued its plant to fair value. The plant was expected to have a further 5-year life. All the inventory on hand at 1 April 2015 was sold by the end of the fi nancial year. At 1 April 2015, Ella Ltd had recorded goodwill of $2000. As a result of an impairment test on 31 March 2016, Ella Ltd wrote goodwill down by $1500 in the consolidation worksheet. The dividend payable was subsequently paid in June 2015. During the period ending 31 March 2016, intragroup sales consisted of $40 000 from Abby Ltd to Ella Ltd at a profi t to Abby Ltd of $10 000. These were all sold to external entities by Ella Ltd for $42 000 before 31 March 2016. Ella Ltd also sold some inventory to Abby Ltd for $10 000. This had cost Ella Ltd $6000. Abby Ltd since has sold all the items to external entities for $8000, except one batch on which Ella Ltd recorded a $500 profi t before tax (original cost to Ella Ltd was $1000). Both entities use the revaluation model in accounting for land. During the 2015–16 period, Abby Ltd and Ella Ltd both recorded revaluation increments, these being $2200 and $1100 respectively. The following information was obtained from the companies for the year ended 31 March 2016: Abby Ltd Ella Ltd Sales Dividend revenue Proceeds on sale of non-current asset $146 000 4 000 30 000 $120 000 — — 180 000 120 000 Cost of sales Other expenses 88 000 44 000 68 000 19 000 132 000 87 000 Profi t before income tax Income tax expense 48 000 (12 000) 33 000 (14 000) Profi t for the year Retained earnings (1/4/15) 36 000 10 000 19 000 5 000 Total available for appropriation Dividend paid 46 000 (8 000) 24 000 (4 000) Retained earnings (31/3/16) $ 38 000 $ 20 000 Required Prepare the consolidated statement of profi t or loss and other comprehensive income as at 31 March 2016. Assume a tax rate of 30%.