Adam PLC is a company operating in the automotive industry and located in Eastern Jamaica. On 1 January 2019 the company purchased 1,470,000 of the ordinary share capital of Eve PLC for $8,200,000. This company is located in Kingston and operates in the food distribution industry. At the time of the acquisition the relevant reserves balances were: retained earnings $240,000 and general reserve $360,000. The management of Adam PLC is seeking to diversify the investment portfolio and so on 1 July 2021 the company acquired 27% of the ordinary share capital of Serpent Limited a distributor of plastic products located in Clarendon for $540,000. The reserve balances on that date were general reserve $180,000 and retained earnings $120,000. Below are the summarized Statements of Financial Position for the three companies at the 31 December 2021. Non-Current Assets Statements of Financial Position as at 31 December 2021 Adam PLC $'000 Eve PLC $'000 $000 $'000 Serpent PLC 5000 $000 11,700 3,900 8,200 560 Property Plant and Equipment Investments in Eve PLC Investment in Serpent Limited Current Assets Inventory 270 Receivables 145 Bank 125 540 EQUITY & LIABILITIES Share Capital: 1$ Ordinary shares General Reserve Retained Earnings Non-Current liabilities Loan Stocks Current Liabilities Accounts Payable Taxation 1,385 200 750 60 67 45 90 60 907 165 21,000 4,807 1,750 18,000 2,100 1,000 1,200 450 180 300 19,500 370 2,920 410 1,590 500 1657 0 600 160 120 400 1,000 70 230 401 160 60 21,000 4,807 1,750 QUESTION 1 (continued) Additional Information: 1. 2. 3. 4. 5. 6. 7. At the date of the acquisition the directors of Adam PLC obtained an assessment of the fair market value of property, plant and equipment owned by Eve PLC. The assessors valued the property at $3,200,000, however no adjustments were made. During the year the market value of stocks in Eve PLC suffered a significant decline due to a failure of production technology. Consequently, at December 31 2021, goodwill was deemed to be impaired by $1,200,000. During the year Eve PLC sold goods to Adam PLC for $660,000 after charging a mark- up of 60%. At 31 December 2021 only 70% of the goods were sold. On July 1, 2021, Adam PLC transferred equipment to Eve PLC at a price of $200,000, the machinery was new and cost Amsterdam PLC $170,000. Eve PLC depreciated the motor vehicle at 25% of the cost to them (on a monthly basis). Non-Controlling Interest in Eve PLC should be valued at $3.60 per share at acquisition date. At year end the investment in Serpent PLC is deemed to be impaired by 20% of cost price. Eve PLC paid $10,000 to clear its account payable to Adam PLC, however Adam PLC did not receive the payment until February 2, 2022. Required: 1. Prepare the Consolidated Balance Sheet for the Adam PLC Group as at 31 December 2021. (36 marks) 2. Explain briefly the benefits of consolidated accounts to the users of financial statements. (4 marks)