Exercise 22.8 ★ ★ ★ CONSOLIDATION WORKSHEET, CONSOLIDATED FINANCIAL STATEMENTS On 31 December 2011, Lara Ltd acquired all the issued shares of Jade Ltd. On this date, the share capital of Jade Ltd consisted of 200 000 shares paid to 50c per share. Other reserves and retained earnings at this date consisted of: General reserve $25 000 Retained earnings 20 000 At 31 December 2011, all the identifi able assets and liabilities of Jade Ltd were recorded at fair value except for some plant and machinery. This plant and machinery, which cost $100 000, had a carrying amount of $85 000 and a fair value of $90 000. The estimated remaining useful life was 10 years. Adjustments for fair values are made on consolidation. Immediately after acquisition, a dividend of $10 000 was declared and paid out of retained earnings. Also, 1 year after acquisition, Jade Ltd used $20 000 from the general reserve on hand at acquisition date to partly pay the balance unpaid on the issued shares. The trial balances of Lara Ltd and Jade Ltd at 31 December 2016 were as shown below: Trial Balances as at 31 December 2016 Lara Ltd Jade Ltd Credits Share capital General reserve Asset revaluation surplus Retained earnings (1/1/16) Other components of equity Current tax liabilities Deferred tax liabilities Payables Sales revenue Other income Proceeds from sale of property, plant and equipment $ 500 000 25 000 10 000 40 000 15 000 22 000 6 240 22 000 250 000 20 000 14 000 $ 120 000 5 000 6 000 65 000 10 000 18 000 5 200 14 000 120 000 5 000 50 000 $ 924 240 $ 418 200 Debits Income tax expense Dividend declared Plant and machinery Accumulated depreciation Motor vehicles Accumulated depreciation Receivables Financial assets Inventory Bank Deferred tax assets Shares in Jade Ltd Cost of sales Other expenses Carrying amount of property, plant and equipment sold $ 20 000 10 000 425 000 (300 000 284 200 (160 000 25 000 60 000 106 440 46 900 12 700 160 000 188 000 28 000 18 000 ) ) $ 10 000 8 000 337 000 (261 000 152 600 (100 000 7 310 40 000 72 000 5 990 6 300 — 80 000 5 000 55 000 ) ) $ 924 240 $ 418 200 Additional information

(a) During the current period, Lara Ltd sold inventory to Jade Ltd for $20 000. This had originally cost Lara Ltd $18 200. Jade Ltd has, by 31 December 2016, sold half this inventory for $12 310.

(b) The tax rate is 30%.

(c) Certain specialised items of plant, considered a separate class of assets, are measured using the revaluation model. At 1 January 2015, the balances of the asset revaluation surplus were $8000 (Lara Ltd) and $7000 (Jade Ltd).

(d) The Other Components of Equity account refl ects movements in the fi nancial assets. The balances of this account at 1 January 2015 were $12 000 (Lara Ltd) and $8000 (Jade Ltd). Required Prepare the consolidated fi nancial statements as at 31 December 2016.