Question FBE Ltd ("FBE") owns 80% of the shares of AFA Ltd ("AFA") and has control over it. The shares were acquired on 1 July 2019 by FBE at a cost of $60,000. At acquisition date, the capital of AFA consisted of 50,000 ordinary shares each fully paid at $1. There were retained earnings of $5,000. All the identifiable assets and liabilities of AFA were recorded at amounts equal to fair value, except for: Plant (cost $50,000) Carrying amount 40,000 Fair value 41,400 At acquisition date, the plant had a remaining useful life of 4 years (depreciate on a straight-line basis). On 1 April 2021, AFA sold inventory to FBE for $5,000. The inventory was originally recorded at a cost of $4,000 in AFA's books. One-quarter of this inventory remained unsold in FBE by end of the current year. The group measures NCI using partial goodwill method. | The companies' trial balances as at 31 December 2021 are shown below. Credits Share Capital General Reserve Retained Earnings (31/12/20) Liabilities Sales Revenue Other Revenues Debits Cost of Sales Other Expenses Assets Income Tax Expense Dividend Declared AFA 50,000 FBE 170,000 41,000 - 16,000 29,500 148,000 55,100 85,000 65,000 23,000 22,000 483,800 273,600 65,000 53,500 22,000 27,000 378,800 136,100 7,200 2,000 10,000 3,000 483,800 273,600 On 1 July 2021, FBE acquired 40% of the shares of B&B Ltd ("B&B") at a cost of $100,000 and exercised significant influence over it. The fair value of the assets and liabilities of B&B at the date of acquisition by FBE were equal to their carrying amounts, with the exception of a machine that had a fair value of $38,500 in excess of its carrying amount. The machine had a remaining useful life of five years on 1 July 2021. On 30 September 2021, FBE purchased goods at a price of $9,000 from B&B. All sales made by B&B to FBE are priced on a cost plus a mark-up of 20% basis. FBE sold out half of these goods to its customers within the year ended 31 December 2021. B&B has reported an after-tax profit of $30,000 and paid a dividend of $10,000 for the year ended 31 December 2021 (assuming the after-tax profit of $30,000 is earned post- acquisition and the dividend $10,000 is paid out of the post-acquisition earnings). Required: Prepare all consolidation adjusting entries and the consolidated financial statements for FBE Group as at 31 December 2021, the current year end. Ignore tax effects on adjustments.