The following are the separate financial statements of Flute ple, Oboe Ltd and Clarinet Ltd at 31 December 2019: Assets Non-current assets Property, plant and equipment Investment in Oboe Ltd and Clarinet Ltd Flute ple 578,800 427,500 1,006,300 Oboe Ltd 398,200 Clarinet Ltd 189,100 398,200 189,100 Current assets Inventories Trade and Other receivables Cash and cash equivalents 163,575 94,500 146,725 404,800 1,411,100 39,750 55,045 54,500 149.295 547,495 32.875 37,550 26,950 97,375 286,475 112,500 Total assets Equity and Liabilities Equity Ordinary share capital - 1 Capital reserves Retained earnings Total equity Non-current liabilities 10% debenture Current Liabilities Trade and Other payables Taxation 475,000 125,000 686,500 1,286,500 133,800 40,000 325.000 498.800 106,875 219,375 30,000 69,600 55,000 124.600 1,411,100 42,695 6,000 48.695 547,495 34,100 3,000 37,100 286,475 Total equity and liabilities Additional information: 1. Flute ple have two investments: Oboe Ltd that it acquired on 1 January 2019 and Clarinet Ltd that it acquired a number of years ago. They acquired 75% of the share capital in Oboe Ltd when the balance on the retained earnings were 285,000 and capital reserves were 30,000. Flute ple account for Non-Controlling Interests using the full goodwill method and have calculated the fair value of Non-Controlling Interests at the date of acquisition was 125,800. 2. Flute plc acquired 30% of the share capital of Clarinet Ltd for 57,500 when the retained earnings were 41,825. 3. Subsequent to the preparation of the above financial statements of both companies, an ordinary dividend of 30,000 was declared and approved by Oboe Ltd. Requirement: (a) Prepare the Consolidated Statement of Financial Position for the Flute Group as at 31 December 2019, showing the following accounts: Cost of Control; Non-controlling Interests; Consolidated Revenue and Capital Reserves. 45 marks (b) Why is it necessary on consolidation to adjust for intercompany trade? Please discuss this in the context of the sale of inventory from one group-company to another? 5 marks Total 50 marks . The following are the separate financial statements of Flute ple, Oboe Ltd and Clarinet Ltd at 31 December 2019: Assets Non-current assets Property, plant and equipment Investment in Oboe Ltd and Clarinet Ltd Flute ple 578,800 427,500 1,006,300 Oboe Ltd 398,200 Clarinet Ltd 189,100 398,200 189,100 Current assets Inventories Trade and Other receivables Cash and cash equivalents 163,575 94,500 146,725 404,800 1,411,100 39,750 55,045 54,500 149.295 547,495 32.875 37,550 26,950 97,375 286,475 112,500 Total assets Equity and Liabilities Equity Ordinary share capital - 1 Capital reserves Retained earnings Total equity Non-current liabilities 10% debenture Current Liabilities Trade and Other payables Taxation 475,000 125,000 686,500 1,286,500 133,800 40,000 325.000 498.800 106,875 219,375 30,000 69,600 55,000 124.600 1,411,100 42,695 6,000 48.695 547,495 34,100 3,000 37,100 286,475 Total equity and liabilities Additional information: 1. Flute ple have two investments: Oboe Ltd that it acquired on 1 January 2019 and Clarinet Ltd that it acquired a number of years ago. They acquired 75% of the share capital in Oboe Ltd when the balance on the retained earnings were 285,000 and capital reserves were 30,000. Flute ple account for Non-Controlling Interests using the full goodwill method and have calculated the fair value of Non-Controlling Interests at the date of acquisition was 125,800. 2. Flute plc acquired 30% of the share capital of Clarinet Ltd for 57,500 when the retained earnings were 41,825. 3. Subsequent to the preparation of the above financial statements of both companies, an ordinary dividend of 30,000 was declared and approved by Oboe Ltd. Requirement: (a) Prepare the Consolidated Statement of Financial Position for the Flute Group as at 31 December 2019, showing the following accounts: Cost of Control; Non-controlling Interests; Consolidated Revenue and Capital Reserves. 45 marks (b) Why is it necessary on consolidation to adjust for intercompany trade? Please discuss this in the context of the sale of inventory from one group-company to another? 5 marks Total 50 marks