PART A

$.$

$$Prepare Consolidated Financial Statements

In this part, you are given the relevant information about a hypothetic case of business

combination between Alpha Inc. and Beta Inc..

On January

$1$

$,$

$2021$

$,$

$$Alpha Inc.

$(\text{'}$

Alpha

$\text{'})$

$$acquired control over Beta Inc.

$(\text{'}$

Beta

$\text{'})$

$$by acquiring

$80$

$\%$

$$of the shares of Beta for $

$5$

$,$

$000$

$.$

$$On the date of the acquisition, the equity in Beta

comprised the following:

This equity reflected the fair value of all the assets and liabilities of Beta, with the exception

of land, which had a fair value of $

$250$

$$in excess of the carrying amounts, respectively.

The following additional information is available:

During the year ended December

$31$

$,$

$2022$

$,$

$$Beta sold inventory to Alpha at a price of $

$600$

$.$

This inventory had cost Beta $

$460$

$.$

$$As of December

$31$

$,$

$2022$

$,$

$$Alpha still had

$45$

$\%$

$$of the

inventory in stock.

During the year ended December

$31$

$,$

$2023$

$,$

$$Alpha sold inventory to Beta at a profit of $

$400$

$.$

This inventory had cost Alpha $

$1$

$,$

$000$

$.$

$$As of December

$31$

$,$

$2023$

$,$

$$Beta had all these

inventories in stock.

On January

$1$

$,$

$2022$

$,$

$$Beta sold an equipment to Alpha at a profit of $

$1$

$,$

$000$

$.$

$$Alpha has since

depreciated the equipment on a straight

$-$

line basis assuming a useful life of five years.

During the year ended December

$31$

$,$

$2023$

$,$

$$Beta rented office space from Alpha at a cost

of $

$600$

$.$

$$As of December

$31$

$,$

$2023$

$,$

$$Beta still owed $

$100$

$$of the rent.

During the year ended December

$31$

$,$

$2023$

$,$

$$Beta declared and paid a dividend of $

$500$

$.$

The impairment tests on cash

$-$

generating units at the end of

$2021$

$,$

$2022$

$$and

$2023$

$$revealed

that the recoverable amount of goodwill is $

$450$

$,$

$

$350$

$,$

$$and $

$750$

$$respectively$.$

Assume that the corporate tax rate is

$40$

$\%$

$$and impairment loss on goodwill is not tax

deductible.

Both companies have December

$31$

$$year end.

The financial statements of Alpha and Beta for the fiscal year ended December

$31$

$,$

$2023$

are provided in the Excel spreadsheet.

Assume that Beta is Alpha's only subsidiary and the NCI equity is valued under Identifiable

Net Asset

$($

INA

$)$

$$method$.$ Please use the information above and data provided in the attached

Excel sheet to prepare the consolidated Income Statement for the fiscal year ended on

December

$31$

$,$

$2023$

$,$

$$consolidated Statement of Retained Earnings and Balance Sheet as at

December