P3-1 Retic Ltd. acquired 100% of the share capital of Dorado Ltd. for $102,000 on January 1, 2011, when the cquity of Dorado consisted of: Share capital50,000 shares $50,000 Retained earnings 30,000 All of Dorado's identifiable assets and liabilities 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 five years. All the inventory on hand at January 1, 2011, was sold by December 31, 2011. The income tax rate is 40%. At December 31, 2013, the following information was obtained from both entities. Retic Dorado Profit before tax $ 50,000 $ 40,000 Income tax expense 20,000 15,000 Retic Dorado Profit 30,000 25,000 Retained earnings (1/1/13) 65,000 35,000 Retained earnings (31/12/13) 95,000 60,000 Share capital 150,000 50,000 Retained earnings 95,000 60,000 Total equity 245,000 110,000 Provisions 65,000 10,000 Payables 20,000 5,000 Total liabilities 85,000 15,000 Total equity and liabilities $330,000 $125,000 Cash $ 13,000 $ 14,000 Accounts receivable 30,000 25,000 Inventory 70,000 50,000 Investment in Dorado Ltd. 102,000 Plant net 115,000 36,000 Total assets $330,000 $125,000 Required (a) Prepare the consolidation process adjustments for the preparation of consolidated financial statements for Retic and its subsidiary, Dorado, as at January 1, 2011. (6) Prepare the consolidated financial statements for Retic and its subsidiary, Dorado, as at December 31, 2013