Pearse Ltd has two group companies, Streach Ltd and Axien Ltd. The income statements for Pearse Ltd, Streach Ltd and Axien Ltd for the year ended 31 December 2022 are given as follows: The following information are also relevant for the question: Pearse Ltd acquired 80\% of Streach Ltd on 1 January 2019 for 1,580,000, gaining significant influence over Streach Ltd. On this date, the share capital of Streach Ltd was 445,000 and the retained earnings of Streach Ltd was 947,000. Pearse Ltd acquired 30% of Axien Ltd for 1,400,000 on 1 January 2021, gaining partial influence over Axien Ltd. Axien Ltd's share capital and reserves were 502,000 on 1 January 2021. The share capital of Axien Ltd is 100,000 units of 0.75 shares. The interest income in Pearse Ltd includes interest income on its 90% holding of bonds issued by Streach Ltd. expense correctly. Pearse Ltd acquired these bonds without any goodwill arising, on 1 January 2021. The interest expense recorded by Streach Ltd represents the interest on the full bond issue. All companies have accounted for interest income and interest expense correctly. During the year Streach Ltd sold goods costing 15,800 to Pearse Ltd for 110,000.25% of this inventory is included in Pearse Ltd's inventory at the year end. During the year Axien Ltd sold goods costing 42,000 to Pearse Ltd for 56,000. 50% of this inventory is still in Pearse Ltd's inventory at the year end. Goodwill is capitalised. Impairment of 40% of the value of the goodwill of Streach Ltd was recognised in 2020 and impairment of 40% of the value of the goodwill in Axien Ltd is recognised in 2022. At the year-end Pearse Ltd charges both Streach Ltd and Axien Ltd a management fee of 10% of turnover. The companies have accounted for the management fee correctly. The management fee income in Pearse Ltd represents management fee income from Streach Ltd and Axien Ltd. Streach Ltd and Axien Ltd have accounted for management fee expenses under administrative expenses. The investment income in Pearse Ltd comprises of dividend income from both group and non-group companies. The retained earnings brought forward as at 1 January 2022 and dividend expense for the year ended 31 December 2022 for Pearse Ltd, Streach Ltd and Axien Ltd were as follows: Required: Prepare the consolidated income statement for Pearse Ltd for the year ended 31 December 2022, showing retained earnings brought forward, dividend expense and retained earnings carried forward either on the face of the income statement or in the consolidated retained earnings section of the statement of changes in equity. [20 marks] Pearse Ltd has two group companies, Streach Ltd and Axien Ltd. The income statements for Pearse Ltd, Streach Ltd and Axien Ltd for the year ended 31 December 2022 are given as follows: The following information are also relevant for the question: Pearse Ltd acquired 80\% of Streach Ltd on 1 January 2019 for 1,580,000, gaining significant influence over Streach Ltd. On this date, the share capital of Streach Ltd was 445,000 and the retained earnings of Streach Ltd was 947,000. Pearse Ltd acquired 30% of Axien Ltd for 1,400,000 on 1 January 2021, gaining partial influence over Axien Ltd. Axien Ltd's share capital and reserves were 502,000 on 1 January 2021. The share capital of Axien Ltd is 100,000 units of 0.75 shares. The interest income in Pearse Ltd includes interest income on its 90% holding of bonds issued by Streach Ltd. expense correctly. Pearse Ltd acquired these bonds without any goodwill arising, on 1 January 2021. The interest expense recorded by Streach Ltd represents the interest on the full bond issue. All companies have accounted for interest income and interest expense correctly. During the year Streach Ltd sold goods costing 15,800 to Pearse Ltd for 110,000.25% of this inventory is included in Pearse Ltd's inventory at the year end. During the year Axien Ltd sold goods costing 42,000 to Pearse Ltd for 56,000. 50% of this inventory is still in Pearse Ltd's inventory at the year end. Goodwill is capitalised. Impairment of 40% of the value of the goodwill of Streach Ltd was recognised in 2020 and impairment of 40% of the value of the goodwill in Axien Ltd is recognised in 2022. At the year-end Pearse Ltd charges both Streach Ltd and Axien Ltd a management fee of 10% of turnover. The companies have accounted for the management fee correctly. The management fee income in Pearse Ltd represents management fee income from Streach Ltd and Axien Ltd. Streach Ltd and Axien Ltd have accounted for management fee expenses under administrative expenses. The investment income in Pearse Ltd comprises of dividend income from both group and non-group companies. The retained earnings brought forward as at 1 January 2022 and dividend expense for the year ended 31 December 2022 for Pearse Ltd, Streach Ltd and Axien Ltd were as follows: Required: Prepare the consolidated income statement for Pearse Ltd for the year ended 31 December 2022, showing retained earnings brought forward, dividend expense and retained earnings carried forward either on the face of the income statement or in the consolidated retained earnings section of the statement of changes in equity. [20 marks]
