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question 2 Question 2 (33 marks) The nancial statements of Company Permanent and its subsidiary Company Senior are shown below. Statement of Financial Position As

question 2

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Question 2 (33 marks) The nancial statements of Company Permanent and its subsidiary Company Senior are shown below. Statement of Financial Position As at 31 December 2020 Permanent Senior $ $ Investment in Senior 759,000 - Other net assets 4,354,400 1,000,000 5,113,400 1,000,000 Share capital 2,305,000 310,000 Retained earnings 2,082,000 540,055 Liability 726,400 149,945 5,113,400 1,000,000 Income Statement and Partial Statement of Changes in Equity For the Year Ended 31 December 2020 Permanent Senior $ $ Sales 1,000,000 647,000 Cost of sales (900,000) (313,945) Dividend income from Senior 240,000 - Prot before tax 340,000 333,055 Tax (202,000) (3,000) Prot after tax 138,000 330,055 Retained earnings, 1 January 2020 2,050,000 510,000 Dividends declared (106,000) (300,000) Retained earnings, 31 December 2020 2,082,000 540,055 (A) Permanent acquired 80% of interest in Senior on 1 January 2018 when the shareholders' equity of Senior was as follows: Share capital $310,000 Retained earnings $140,000 Fair value of identiable net assets of Senior was close to the book value. (B) Non-controlling interest is calculated on a fair value basis, and it was $121,000 on 1 January 2018. (C) Goodwill impairment was $70,000 in 2018 and $60,000 in 2020. (D) lntercompany sales from Senior to Permanent during 2020 was $100,000. Cost to Senior was $90,000. All the purchase was still kept by Permanent as at 31 December 2020. Required: a. Prepare the consolidation adjustment and elimination entries for the year ended 31 December 2020. Show all relevant workings. Worksheets are not required. (19 marks) b. Prepare the Consolidated Statement of Financial Position as at 31 December 2020 and the Income Statement and Partial Statement of Changes in Equity for the year ended 31 December 2020. Worksheets are required. (14 marks) [Total for Question 2: 33 marks]

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