1.5 Consolidation (20 marks) Battery Ltd is a small company that manufactures batteries. Reef Ltd believes it can make significant profits from synergies of integrating Battery Ltd into its business and approaches Battery's shareholders with an offer to buy the company. The shareholders agree, and on 1 July 2022, Reef Ltd acquired all the share capital in Battery Ltd for $6,000,000 (paid in cash). At that date, Battery (Ltd.'s equity consisted of: Share Capital 100,000 Retained Earnings 1,410,000 1,410,000 At acquisition, all assets were recorded at fair value. After the first year of ownership by Reef Ltd, the "stand-alone" draft financial statements of Battery Ltd at the end 30 June 2023 is as follows: Battery Ltd Statement of profit and loss for the year ended 30 June 2023 Sales revenue (2,800,000) Interest Income 0 Service fee expense 900,000 Operational expenses 1,120,000 Interest expense 50,000 Profit before tax (730,000) Tax expense 219,000 (Profit)/loss after tax (511,000) Statement of financial position at 30 June 2023 Assets Cash at bank 185,000 Accounts receivable 505,000 Inventory (Raw materials and finished goods) 650,000 Liabilities Loan from Reef Ltd (500,000) Income tax payable (219,000) Net assets 621,000 Represented by Shareholders' equity Retained earnings 521,000 Share Capital 100,000 621,000 Reconciliation of opening and closing retained earnings Opening Retained earnings - 1 July 2022 1,410,000 Add profit f