Undervalued assets, full goodwill method, intragroup transactions   LO3, 4, 5, 6 Western Ltd acquired 75% of the issued shares of Quoll Ltd on 1 July 2015. In exchange for these shares, Western Ltd gave a consideration of $26 000 cash and 10 000 shares in Western Ltd, these having a fair value of $2 each. At this date, the shareholders’ equity of Quoll Ltd consisted of: Share capital (15 000 shares) $45 000 Retained earnings 9 000 At this date all the identifiable assets and liabilities of Quoll Ltd were recorded at amounts equal to their fair values except for plant for which the fair value was $2000 greater than the carrying amount of $25 000 (original cost was $35 000). The plant was expected to have a further 5‐year life. The fair value of the non‐controlling interest at 1 July 2015 was $15 000. Western Ltd uses the full goodwill method. The tax rate is 30%. Assets held by Quoll Ltd at 30 June 2020 include financial assets. Gains and losses on these assets are recognised in other comprehensive income. During the year ended 30 June 2020, Quoll Ltd recorded gains of $1500 on these assets. Financial information supplied by the two companies at 30 June 2020 was as follows. Western Ltd Quoll Ltd Sales revenue $ 75 000 $ 118 000 Interest revenue 375 1 000 Dividend revenue 2 700 1 000 78 075 120 000 Cost of sales (51 000) (87 750) Financial expenses (2 250) (3 000) Selling expenses (6 000) (9 000) Other expenses (2 250) (2 250) (61 500) (102 000) Profit before tax 16 575 18 000 Income tax expense (7 500) (8 200) Profit for the year 9 075 9 800 Retained earnings (1/7/19) 28 900 21 700 37 975 31 500 Dividend paid (4 000) (3 600) Western Ltd Quoll Ltd Retained earnings (30/6/20) 33 975 27 900 Share capital 60 000 45 000 Other components of equity — 7 500 Total equity 93 975 80 400 Current liabilities 12 750 4 350 Non‐current liabilities: Loans — 7 500 Total liabilities 12 750 11 850 Total equity and liabilities $106 725 $ 92 250 Plant 45 000 90 000 Accumulated depreciation — plant (25 500) (45 750) Shares in Quoll Ltd 46 000 — Loans to Quoll Ltd 3 750 — Inventories 13 400 23 250 Cash 21 075 750 Financial assets — 16 500 Deferred tax assets 3 000 7 500 Total assets $106 725 $ 92 250 Additional information • At 1 July 2019, Western Ltd held inventories that had been sold to it by Quoll Ltd in the previous year at a profit of $1200. • During the year ended 30 June 2020, Quoll Ltd sold inventories to Western Ltd for $28 500. At 30 June 2020, Western Ltd still had on hand inventories that had been sold to it by Quoll Ltd for a profit of $1800 before tax. • Interest of $375 was paid to Western Ltd by Quoll Ltd on both 30 June 2019 and 30 June 2020. Required Prepare the consolidated financial statements of Western Ltd for the year ended 30 June 2020.