Set out below are the financial statements of Mallet Ltd, its subsidiary Hammer Ltd. and an associated company Gavel Ltd. for the accounting year ended 31 December 20X9: Statements of Financial Position as at 31 December 20X9 Mallet Hammer f Gavel f Assets Non-current assets Land at cost PPE at cost Depreciation 60,000 140,000 110,000 90,000 90,000 30,000 40,000 95,000 52.500 82,500 85,000 15,750 69,250 Investment in Hammer Investment in Gavel 45,000 52,500 20,000 24,000 Current assets Inventory Trade receivables Current account Hammer Current account Gavel Cash and bank Total current assets Total Assets 105,000 98,250 11,250 2,250 17.250 234.000 444,000 5,250 102.750 185,250 11.500 55,500 124,750 EEEE 45,000 37,500 Equity and Liabilities Capital and reserves 1 ordinary shares Revaluation Reserve General reserve Retained earnings 187,500 50,000 22,500 112.500 372,500 15,000 90,000 150,000 9,000 44.500 91,000 49,000 Current liabilities Trade payables Current account Mallet Taxation Total equity and liabilities 18,750 11,250 5,250 185,250 25,500 2,250 6.000 124,750 22.500 444,000 ======= Statements of comprehensive income for the year ended 31 December 20X9 Mallet Hammer Gavel Sales Cost of sales 225,000 67,500 120,000 60,000 75,000 30,000 Gross Profit Other expenses Dividends received 157,500 70,500 7,500 60,000 37,500 45,000 30,000 7,500 Profit before tax Tax 94,500 22,500 22,500 5,250 22,500 6,000 Profit for year 72,000 17,250 16,500 ====== Dividends paid in year 30,000 8,000 5,000 Mallet Ltd. acquired 70% of the shares in Hammer Ltd. on 1 January 20x5 when the balance on the retained earnings of Hammer Ltd. was 45,000 and the balance on the general reserve of Hammer Ltd. was 12,000. The fair value of the land at the date of acquisition was 50,000 in Hammer Ltd. The fair value of the non-controlling interest in Hammer Ltd. on 1 January 20x5 was 38,000. Group policy is to measure non-controlling interests at fair value. Mallet Ltd. also acquired 30% of the shares in Gavel Ltd. on 1 January X6 when the balance on Gavel's retained earnings was 22,500 and the general reserve 6,000. During the year to 31 December 20x9 Mallet Ltd. sold Hammer Ltd. goods for 15,000 which included a mark-up of one-quarter. 70% of these goods are still in inventory at the end of the year. Required: (a) Prepare a consolidated statement of comprehensive income for the year ending 31 December 20X9, including the associated company Gavel's results. [10 marks] (b) Prepare a consolidated statement of financial position at 31 December 20x9, including the associated company. [20 marks]
