Question 1 On 10 May 2016, Rose Ltd acquired 80% of the ordinary shares of a foreign company Petal Ltd to form Rose-Petal Group (RPG). At that date the balance on the retained earnings of Petal Ltd was $34,000. The non-controlling interest in Petal was measured as the proportionate share of the net assets of the subsidiary. No shares have been issued by Petal since acquisition. The summarised income statements and balance sheets of Rose Ltd and Petal Ltd as at 31 December 2019 were as follows: Income Statement for the year ended 31 December 2019 Rose Petal Sales 748,440 190,050 Opening inventories 83,160 25,186 Purchases 415,800 106,920 Closing inventories 29,700 20,434 Cost of sales 469,260 111,672 Gross profit 279,180 78,408 Depreciation 47,520 14,256 Other expenses 12.593 4,752 Interest paid 8.316 2376 Total expenses 68,429 21,364 Profit before tax 210,751 57,024 Taxation 53,460 14.256 Profit after tax 157,291 42,768 Balance Sheet as on 31 December 2019 Rose Petal $ Non-current assets 166,320 109,296 Investment in Petal Ltd 5,346 Current assets: Inventories 29,700 20,434 Trade receivables Petal Ltd Cash 71,874 26,136 1,719 13,068 950 Total current assets 116,361 47,520 Total Assets 288,027 156,816 Current liabilities: Trade payables Rose Ltd Taxation 71,280 21,384 3,438 23760 16,632 Total current liabilities Debentures 95,040 41,454 59,400 19.008 Total assets less liabilities 133.587 96,354 Capital and reserves Share capital 58.446 7.195