On 1 July 2016, Parrot Ltd acquired 80% of the share capital of Squirrel Ltd for $264 800. On that date, the statement of financial position of Squirrel Ltd consisted of: Share capital $250 000 , General reserve $10 000, Asset revaluation surplus $15 000 , Retained earnings $10 000, Liabilities $180 000, Cash $ 35 000, Inventories $70 000, Land $65 000 , Plant and equipment $300 000, Accumulated depreciation plant and equipment ($130 000), Trademark $100 000, Goodwill $25 000.

At 1 July 2016, all identifiable assets and liabilities of Squirrel Ltd were recorded at fair value except for:

Inventories: $ 70 000 (CA) , $ 80 000 (FV)

Land : 65 000 (CA) , 85 000 (FV)

Plant and equipment (cost $200 000): 70 000 (CA), 90 000 (FV)

Trademark: 100 000 (CA), 110 000 (FV)

During the year ended 30 June 2017, all inventories on hand at the beginning of the year were sold, and the land was sold on 28 February 2017 to Outback Ltd for $80 000. The plant and equipment had a further 5-year life beyond 1 July 2016 and was expected to be used evenly over that time. The trademark was considered to have an indefinite life. Any adjustments for differences at acquisition date between carrying amounts and fair values are made in the consolidation worksheet. Parrot Ltd uses the partial goodwill method. The tax rate is assumed to be 30%.

Financial information for Parrot Ltd and Squirrel Ltd for the year ended 30 June 2017 is shown below:

	Parrot LTD	Squirrel LTD
Sales Revenue	200 000	172 000
Other Income	75 000	30 000
	275 000	202 000
Cost of Sales	162 000	128 000
Other expenses	53 000	31 000
	215 000	159 000
Profit from Trading	60 000	43 000
Gains/(Losses) on sales of non-current assets	10 000	5 000
Profit b4 tax	70 000	48 000
income tax expense	20 000	18 000
profit for the period	50 000	30 000
retained earnings (1/7/16)	30 000	10 000
Transfer from general reserve	-	8 000
	80 000	48 000
interim dividend paid	12 000	10 000
final dividend declared	6000	4000
	18 000	14 000
retained earnings(30/6/17)	62 000	34 000
Asset revaluation surplus(1/7/16)		15 000
Gain on revaluation of specialised plant		5000
Asset revaluation surplus (30/6/17)		20 000

During the year ended 30 June 2017, Squirrel Ltd sold inventories to Parrot Ltd for $8000. The original cost of these items to Squirrel Ltd was $5000. One-third of these inventories were still on hand at the end of the year.

On 31 March 2017, Squirrel Ltd transferred an item of plant with a carrying amount of $10 000 to Parrot Ltd for $15 000. Parrot Ltd treated this item as inventories. The item was still on hand at the end of the year. Squirrel Ltd applied a 20% depreciation rate to this type of plant.

Required:

1. Prepare the acquisition analysis and all consolidation worksheet entries (narrations not required) necessary for preparation of the consolidated financial statements for Squirrel Ltd and its subsidiary for the year ended 30 June 2017.

2. Prepare the consolidated statement of profit or loss and other comprehensive income for Parrot Ltd and its subsidiary at 30 June 2017.