Parent plc acquired 80% of the ordinary share capital of Subsidiary plc on 1 January 2009 for 900 $. Share Capital and retained earnings were 600 $ and 400 $ respectively in the subsidiary as the acquisition date. In arriving at the consideration for the shares in Subsidiary the fair value of its PPE were agreed at $ 10 below the book value (5 year remaining life to compute excess acquisition date fair value amortization) and goodwill was impaired by 20 % during 2009 Goodwill calculated using the full goodwill method.

The statements of comprehensive income for P and S for the year ended 31 December 2010 are as follows:

	Parent $	Subsidiary $
Revenue	2940	1020
Cost of sales	(1210)	(560)
Gross profit	1730	460
Distribution cost	(200)	(100)
Operating expenses	(350)	(60)
Interest Expense	(80)	(20)
Dividend Revenue from Subsidiary	40	0
Profit before tax	1140	280
Income tax expense	(180)	(68)
Net income	960	212

During 2010, Parent sold inventory to Subsidiary for 420 including a mark-up of 25% on cost. 25% of this was included in the inventory of Subsidoary remains unsold as at 31 December 2010.

Also at 1 January 2009, Parent sold a PPE to Subsidiary for 70 Sold PPE had a cost of $ 100 and $40 accumulated depreciation. S depreciates this asset over its remaining 5 year life (including a full year of depreciation in the year of purchase) using the straight-line method of depreciation.

Prepare the consolidated statement of comprehensive income for the year ends 31 December 2010.Impairment and depreciation expenses are charged to operating expenses

Remember: goodwill calculations are always done at acquisition date!

Prepare a consolidated income statement for year ending 31/12/2010 and record all necessary entries

Consolidated Statement of comprehensive income for P and S Group for year ended 31 December 2010

	P	S		Group
Revenue	2940	1020
Cost of Goods sold	(1210)	(560)
Gross profit
Distribution cost	(200)	(100)
Operating expenses	(350)	(60)
Finance costs	(80)	(20)
Dividend from Subsidiary	40	0
Profit before tax
Income tax expense	(180)	(68)
Net income
Net income attributable to controlling interest (owners of parent)
Net income attributable to Non-controlling interest