ILLUSTRATION 4 The following statements of profit or loss relate to Helsinki and its subsidiary Stockholm for the year ended 31 December 2020: Revenue Cost of sales Gross profit Helsinki $000 200,000 (110,000) Stockholm $000 100,000 (50,000) 90,000 50,000 Distribution costs (20,000) (10,000) Administrative expenses (40,000) (20,000) Operating profit 30,000 20,000 Investment income from Stockholm 7,500 Profit before tax 37,500 20,000 Taxation (10,500) (6,000) Profit for the year 27,000 14,000 The following notes are relevant to the preparation of the consolidated financial statements: (i) Helsinki acquired three million of the equity shares of Stockholm on 30 June 2020 when Stockholm had a total of four million equity shares of $1 each in issue. Helsinki paid a total of $25 million to acquire the shares. (ii) At 30 June 2020, the retained earnings of Stockholm were $20 million and the carrying amounts of the net assets of Stockholm approximated to their fair values. (iii) It is group accounting policy to account for non-controlling interest at its fair value. At the date of acquisition, the fair value of the non-controlling interest in Stockholm was $7 million. (iv) During the post-acquisition period, Stockholm sold goods to Helsinki. The goods originally cost $10 million and they were sold to Helsinki at a mark-up of 25%. At 31 December 2020, Helsinki still had 40% of these goods within its inventory. Required: a) Calculate goodwill arising on acquisition of Stockholm by Helsinki. b) Prepare the consolidated statement of profit or loss for the Helsinki group for the year ended 31 December 2020.