Question 2 Auriga Ltd acquired all the shares of Perseus Ltd on 1 Jan 2013 when its equity consisted of: Share capital Retained earnings $100 000 35 000 At 1 Jan 2013, all the identifiable assets and liabilities of Perseus Ltd were recorded as fair value except for: Inventory Land Plant (cost $120 000) Carrying amount $ 18.000 120 000 Fair Value $ 22.000 130 000 95 000 98 000 The inventory was all sold by 31 Dec 2013. The plant had a further 5-year life but was sold on 1 July 2015 for $50 000. The land was sold in March 2013 for $150000. At 1 Jan 2013, Perseus Ltd had guaranteed a loan taken out by Swede Ltd. Persues Ltd had not recognised a liability in relation to the guarantee. However as Swede Ltd was not performing well, Auriga Ltd valued a guarantee liability at $5000. In June 2015, Swede Ltd repaid the loan. Perseus Ltd had also invented a special tool and patented the process. No asset was recorded by Perseus Ltd, but Auriga Ltd valued the patent at $6000, with an expected useful life of 6 years. Tax rate is 30%. Financial information for the companies for the year ended 31 Dec 2015 is as follows: Profit before tax Income tax expense Profit for the year Other comprehensive income: Auriga Ltd Perseus Ltd $ 50 000 $ 15.000 (20 000) 30 000 (6 000) 9 000 Gains on plant revaluation Loss on FA fair value change Total comprehensive income for the year $ 32.000 6.000 (4 000) $ (1 000) (10 000) Profit $ 30 000 $ 9.000 Retained earnings (1/1/15) 37 000 45 000 67 000 54 000 Dividend (20 000) Retained earnings (31/12/15) 47 000 54 000 Share capital General reserve 150 000 100 000 12 000 Asset revaluation reserve (1/1/15) 14 000 Gains on plant revaluation 6,000 Asset revaluation reserve (31/12/15) 20 000 FA fair value change reserve (1/1/15) 14 000 14 000 Losses on FA fair value change (4.000) (10,000) FA fair value change reserve (31/12/15) 10 000 4 000 Total equity 239 000 158 000 Payables Loan Total Liabilities 19 000 8 000 25 000 44 000 8 000 Total equity and liabilities $ 283 000 $ 166 000 Cash Financial assets 5 000 10 000 14 000 5 000 Inventory Plant and equipment Accumulated depreciation 30 000 21 000 140 000 163 000 (62 000) (37 000) Shares in Perseus Ltd 160 000 Total assets $ 283 000 $ 166 000 Required Prepare the consolidated financial statements for Auriga Ltd as at 31 Dec 2015. Include consolidation adjustment journal entries and a consolidation worksheet.