Adaris Group, headquartered in the UK, owns a 70 percent interest in Adaris Malaysia. The acquisition cost was 100 million. At the date of acquisition, 1 January 2012, Adaris Malaysia's book value was 30 million, and its identifiable net assets were carried at amounts approximating fair value. Goodwill recognized for this acquisition was impaired by 10 million during the period 2012-2014. Goodwill impairment for 2015, the current year, is 2.5 million. The following information relates to intercompany transactions:

• In 2013, Adaris sold land with a book value of 1 million to Adaris Malaysia for 1.5 million. Adaris Malaysia sold the land to an outside party in 2015 for 1.8 million.
• Adaris sells merchandise to Adaris Malaysia at a markup of 20% on cost. Adaris Malaysia's beginning inventory contains 5.7 million in merchandise acquired from Adaris. Its ending inventory contains 5.1 million in merchandise acquired from Adaris. Adaris sold merchandise priced at 130 million to Adaris Malaysia during 2015.
• On 30 June 2012, Adaris Malaysia sold equipment with a book value of 25 million to Adaris for 32.5 million. The equipment had a remaining life of five years, straight-line. Adaris still holds the equipment.

It is now 31 December 2015, the end of Adaris' accounting year. Adaris uses the complete equity method to account for its investment in Adaris Malaysia on its own books. Adaris also uses the IFRS alternative approach to valuing the noncontrolling interest in Adaris Malaysia. Below are the separate trial balances of Adaris Group and Adaris Malaysia at 31 December 2015.

(in thousands)	Adaris Group Dr (Cr)	Adaris Malaysia Dr (Cr)
Current assets	17,500	11,000
Plant assets, net	116,725	105,000
Investment in Adaris Malaysia	102,925	--
Liabilities	(150,000)	(60,000)
Capital stock	(20,000)	(15,000)
Retained earnings, beginning	(62,500)	(37,500)
Sales revenue and gains	(300,000)	(245,000)
Equity in net income	(1,650)	--
Cost of goods sold	215,000	105,000
Operating expenses	82,000	136,500
Total	0	0

Enter all answers in thousands.

a. Calculate Adaris Group's equity in net income and the noncontrolling interest in net income for the current year.

Use negative signs with answers that reduce the net income amounts.

(in thousands)	Equity in NI	Noncontrolling Interest in NI
Adaris Malaysia's reported net income	Answer	Answer
Goodwill impairment loss	Answer	Answer
Downstream land sale gain confirmed	Answer	Answer
Downstream beginning inventory profit confirmed	Answer	Answer
Downstream ending inventory profit unconfirmed	Answer	Answer
Upstream equipment sale profit confirmed	Answer	Answer
	Answer	Answer

b. Prepare a working paper to consolidate the trial balances of Adaris Group and Adaris Malaysia.

Remember to use negative signs in the Consolidated Balances Dr(Cr) column with credit balance answers.

Consolidation Working Paper
	Trial Balances Taken From Books	Eliminations
(in thousands)	Adaris Dr (Cr)	Adaris Malaysia Dr (Cr)	Debit	Credit		Consolidated Balances Dr (Cr)
Current assets	17,500	11,000			Answer	(I-3)	Answer
Plant assets, net	116,725	105,000	(I-6)	Answer	Answer	(I-5)	Answer
Goodwill	--	--	(R)	Answer	Answer	(O)	Answer
Investment in Adaris Malaysia	102,925	--	(I-1)	Answer	Answer	(O)	Answer
			(I-2)	Answer	Answer	(E)	--
					Answer	(R)	--
Liabilities	(150,000)	(60,000)					Answer
Capital stock	(20,000)	(15,000)	(E)	Answer			Answer
Retained earnings, beg.	(62,500)	(37,500)	(I-5)	Answer			Answer
			(E)	Answer
Noncontrolling interest	--	--			Answer	(E)	Answer
					Answer	(N)
Sales revenue and gains	(300,000)	(245,000)	(I-4)	Answer	Answer	(I-1)	Answer
Equity in net income	(1,650)		(C)	Answer			Answer
Cost of goods sold	215,000	105,000	(I-3)	Answer	Answer	(I-2)	Answer
					Answer	(I-4)
Operating expenses	82,000	136,500	(O)	Answer	Answer	(I-6)	Answer
Noncontrolling interest in NI	--	--	(N)	Answer			Answer
	0	0		Answer	Answer		Answer

c. Present the consolidated income statement for 2015 and the consolidated balance sheet at 31 December 2015.

Do not use negative signs with any answers below.

Consolidated Income Statement For the Year Ended 31 December 2015 (in thousands)
Sales revenue and gains	Answer
Costs of goods sold	Answer
Gross margin	Answer
Operating expenses	Answer
Consolidated net income	Answer
Noncontrolling interest in net income	Answer
Consolidated net income to controlling interest	Answer

Do not use negative signs with any of your answers below.

Consolidated Balance Sheet 31 December 2015 (in thousands)
Assets
Current assets	Answer
Plant assets, net	Answer
Goodwill	Answer
Total assets	Answer
Liabilities and stockholders' equity
Liabilities	Answer
Stockholders' equity to Adaris:
Capital stock	Answer
Retained earnings	Answer
Stockholders' equity to Adaris	Answer
Noncontrolling interest	Answer
Total stockholders' equity	Answer
Total liabilities and stockholders' equity	Answer