Exercise 21.6 Parent holds previously acquired investment, consolidation worksheet On 1 December 2009, Reticulum Lid acquired 20% of the shares of Dorado Lid for $10 000. These were classified as a financial investment by Reticulum Ltd with changes in fair value being recognised in other comprehensive income. At 30 June 2013, these were recorded at a fair value of f20 400. Reticulum Ltd acquired the remaining 80% of the share capital of Dorado Lid for $81 600 on 1 July 2013 when the equity of Dorado Ltd consisted of: Share capital - 50 000 shares $50 000 Retained earnings 30 000 All identifiable assets and liabilities of Dorado Lid were recorded at amounts equal to fair value, except as follows: Carrying amount Fair value Inventory $20 000 (25 000 Plant (cost $80 000) 60 000 70 000 The plant is expected to have a further useful life of 5 years. All the inventory on hand at 1 July 2013 was sold by 31 December 2013. The income tax rate is 30%. At 30 June 2015, the information below was obtained from both entities. For the year ending 30 June 2015 Reticulum Ltd Dorado Ltd Profit before tax f 50 000 f 40 000 Income tax expense (20 000) (15 000) Profit 30 000 25 000 Retained earnings (1/7/14) 50 000 35 000 80 000 60 000 Transfer to general reserve (approved by parent) (20 000) (5 000)