Close Ltd The summarized statements of financial position of Close Ltd and Steele Ltd as at 31 December 20X9 were as follows.

	Close Ltd		Steele Ltd
ASSETS
Non-current assets		80,000		58,200
Property, plant and equipment		84,000		-
Investments		164,000		58,200
Current assets
Inventories	18,000		12,000
Trade and other receivables	62,700		21,100
Investments	-		2,500
Cash and cash equivalents	10,000		3,000
Current account Close Ltd	-		3,200
		90,700		41,800
Total assets		254,700		100,000
EQUITY AND LIABILITIES
Equity
Ordinary share capital (1 Shares)		120,000		60,000
Share premium account		18,000		-
Revaluation surplus		23,000		16,000
Retained earnings		56,000		13,000
Total equity		217,000		89,000
Current liabilities
Trade and other payables	35,000		11,000
Current account Steele Ltd	2,700		-
		37,700		11,000
Total equity and liabilities		254,700		100,000

The following information is relevant.

(1) On 1 January 20X7 Close Ltd acquired 48,000 shares in Steele Ltd for 84,000 cash when the retained earnings of Steele Ltd were 8,000 and the balance on the revaluation surplus was 16,000.

(2) At the acquisition date Steele Ltd disclosed a contingent liability as a potential 300,000, although its fair value was assessed at 58,000. A final decision on this matter is expected to be reached within the next 12 months.

(3) The inventories of Close Ltd include 4,000 of goods from Steele Ltd invoiced to Close Ltd at cost plus 25%.

(4) A cheque for 500 from Close Ltd to Steele Ltd, sent before 31 December 20X9, was not received by the latter company until January 20Y0.

(5) An impairment review at 31 December 20X9 revealed that an impairment loss of 500 in respect of goodwill on the acquisition of Steele Ltd needs to be recognised. By 1 January 20X9 this goodwill had already suffered impairments totalling 1,700.

(6) The non-controlling interest and goodwill arising on the acquisition of Steele Ltd were both calculated using the proportionate method.

Requirements

(a) Prepare the consolidated statement of financial position of Close Ltd and its subsidiary Steele Ltd as at 31 December 20X9 and show each/all of the workings. (12 marks)

(b) Explain the adjustments necessary in respect of intra-group sales when preparing the consolidated statement of financial position of the Close Ltd group. (6 marks)