Captain Ltd acquired its shares in America Ltd at 1 January 2020 for $40,000 on acum div.basis. At that date, America Ltd recorded share capital of $20 000. America Ltd had declared prior to the acquisition a dividend of $3,500 that was paid in March 2020.

Financial information for Captain Ltd and its 100% owned subsidiary, America Ltd, for the year ended 31 December 2020 is provided below:

Captain Ltd America Ltd Sales revenue $50,000 $47,200 Dividend revenue 2,000 0 Gain on sale of property, plant and equipment 2,000 4,000 Other income 2,000 4,000 Total income 56,000 55,200 Cost of sales 42,000 36,000 Other expenses 6,000 2,000 Total expenses 48,000 38,000 Profit before income tax 8,000 17,200 Income tax expense 2,700 3,900 Profit for the period 5,300 13,300 Retained earnings (1/1/20) 12,000 6,000 17,300 19,300 Dividend declared 5,000 2,000 Retained earnings (31/12/20) 12,300 17,300