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 $465 000 Cash $ 35 000 Inventories 70 000 Land 65 000 Plant and equipment 300 000 Accumulated depreciation plant and equipment (130 000) Trademark 100 000 Goodwill25 000 $ 465 000 At 1 July 2016, all identifiable assets and liabilities of Squirrel Ltd were recorded at fair value except for: Carrying amount Fair value Inventories $ 70 000 $ 80 000 Land 65 000 85 000 Plant and equipment (cost $200 000) 70 000 90 000 Trademark 100 000 110 000 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 sale of non-current assets 10 0005 000 Profit before 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 declared6 0004 000 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 plant5 000 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.

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