The balance sheets of Red Ltd and Pink Ltd at 31 December 20X2 are as follows:

Income statements for the year ended 31 December 20X2

Red Ltd acquired 75% of the shares in Pink Ltd on 1 Januar y 20X0 when Pink Ltd’s retained ear nings were $30,000 and the balance on Pink’s general reser ve was $8,000.
During the year Pink sold Red goods for $9,000 plus a mark-up of one-third. Half of these goods were still in inventor y at the end of the year. Goodwill suffered an impairment loss of 20%.
Required:
Prepare a consolidated income statement for the year ended 31/12/20X2 and a balance sheet as at that date.

Transcribed Image Text:

Red Pink $ $ ASSETS Non-current assets 200,000 100,000 Depreciation 80,000 30,000 120,000 70,000 Investment in Pink Ltd 110,000 Current assets Inventories 100,000 30,000 Trade receivables 80,000 40,000 Current account - Pink Ltd 10,000 Bank 16,000 8,000 206,000 78,000 Total assets 436,000 148,000 EQUITY AND LIABILITIES Capital and reserves $1 common shares 176,000 40,000 General reserve Retained earnings Current liabilities 20,000 14,000 100,000 60,000 296,000 114,000 Trade payables 125,996 18,000 Taxation payable 14,004 6,000 Current account - Red Ltd 10,000 140,000 34,000 Total equity and liabilities 436,000 148,000