The Earth Group carries on business as a distributor of warehouse equipment and importer of fruits into the country. Earth was incorporated in 2011 to distribute warehouse equipment. It diversified its activities during 2013 to include the import and distribution of fruits and expand its operations by the acquisition of shares in Mango in 2015 and in Plum in 2017. Accounts for all companies are made up to 31 December.

The draft income statements for Earth, Mango and Plum for the year ended 31 December 2019 are as follows.

Earth Mango Plum

$000 $000 $000

Revenue 45,600 24,700 22,800

Cost of sales 18,050 5,463 5,320

Gross profit 27,550 19,237 17,480

Distribution costs 3,325 2,137 1,900

Administrative expenses 3,475 950 1,900

Finance costs 325 - -

Profit before tax 20,425 16,150 13,680

Income tax expenses 8,300 5,390 4,241

Profit for the year 2,125 10,760 9,439

Dividends paid and declared for the period 9,500

The draft statements of financial position as at 31 December 2019 are as follows:

Earth Mango Plum

$000 $000 $000

Non-current assets

Property, Plant and Equipment (NBV) 35,483 24,273 13,063

Investments

Shares in Mango 6,650 - -

Shares in Plum - 3,800 -

42,133 28,073 13,063

Current asset 1,568 9,025 8,883

43,701 37,098 21,946

Equity

$1 ordinary shares 8,000 3,000 2,000

Retained earnings 22,638 24,075 19,898

30,638 27,075 21,898

Current liabilities 13,063 10,023 48

43,701 37,098 21,946

The following information is available relating to Earth, Mango and Plum.

a) On 1 January 2015 Earth acquired 2,700,000 $1 ordinary shares in Mango for $6,650,000 at which date there was a credit balance on the retained earnings of Mango of $1,425,000. No shares have been issued by Mango since Earth acquired its interest.

b) On 1 January 2017 Mango acquired 1,600,000 $1 ordinary shares in Plum for $3,800,000 at which date there was a credit balance on the retained earnings of Plum of $950,000. No shares have been issued by Plum since Mango acquired its interest.

c) During 2019, Plum had made intragroup sales to Mango of $480,000 making a profit of 25% on cost and $75,000 of these goods were in inventory on 31 December 2019.

d) During 2019, Mango had intragroup sales to Earth of $260,000 making a profit of 33-1/3% on cost and $60,000 of these goods were in inventories on 31 December 2019.

e) On 1 November 2019 Earth sold warehouse equipment to Mango for $240,000 from inventories. Mango has included this equipment in its property, plant, and equipment. The equipment had been purchased on credit by Earth for $200,000 in October 2019 and this amount in included in its current liabilities as at 31 December 2019.

f) Mango charges depreciation on its warehouse equipment at 20% on cost. It is company policy to charge a full years depreciation in the year of acquisition to be included in the cost of sales.

g) An impairment test conducted at the year end did not reveal any impairment losses.

h) It is the group policy to value the non-controlling interest at fair value at the date of acquisition. The fair value of the non-controlling interests in Mango on 1 January 2015 was $500.000. The fair value of the 28% non-controlling interest in Plum on 1 January 2017 was $900,000.

Required

Prepare for the Earth Group:

a) A consolidated income statement for the year ended 31 December 2019

b) A consolidated statement of financial position as at 31 December 2019