P4.4 Consolidation and analytical check on non-controlling interests On 1 January 20x4, P Co acquired 90% of S Co. Details of S Co as at the date of acquisition are as follows: Share capital........ Retained earnings as at 1 January 20x4. $1,000,000 150,000 $1,150,000 Fair value was different from book value of the following assets of S Co: Fair value $900,000 Book value $800,000 Fixed assets. Remaining useful life for the fixed assets as at acquisition date was five years and residual value of the fixed assets was zero. Fair value of non-controlling interests as at acquisition date was $345,000. The financial statements of P Co and S Co for the year ended 31 December 20x5 are shown below. Assume a tax rate of 20% throughout. 230 ADVANCED FINANCIAL ACCOUNT Income Statement and Partial Statement of Changes in Equity SCO $3,500,000 (1,200,000) $2,300,000 (560,000) $1,740,000 For Year Ended 31 December 20x5 P Co $10,000,000 (7,820,000) $ 2,180,000 (800,000) $ 1,380,000 54,000 100,000 Sales Cost of sales Gross profit. Operating expenses Operating profit Dividend income from S... Interest income - S and bank. Interest expense to P Profit before tax Tax at 20% Profit after tax Dividends declared Profit retained Retained earnings, 1 January Retained earnings, 31 December $ 1,534,000 (306,800) $ 1,227,200 (120,000) $ 1,107,200 1,300,000 $ 2,407,200 (90,000) $1,650,000 (330,000) $1,320,000 (60,000) $1,260,000 400,000 $1,660,000 Statement of Financial Position As at 31 December 20x5 s Co $2,000,000 Investment in S Co Fixed assets.. Loan receivable from S Co. Inventory.... Accounts receivable Other receivables.. Cash. P Co $ 3,200,000 4,500,000 500,000 1,250,000 1,300,000 200,000 320,000 $11,270,000 670,000 500,000 120,000 $3,290,000 $ 3,000,000 2,407,200 Share capital....... Retained earnings Loan payable to P Accounts payable. Other payables. 5,742,800 120,000 $11,270,000 $1,000,000 1,660,000 500,000 80,000 50,000 $3,290,000 Required: 1. Prepare the consolidation adjustments for the year ended 31 December 20x5. 2. Prepare the consolidation worksheets for the year ended 31 December 20x5. 3. Reconcile the non-controlling interests' balance as at 31 December 20x5