The following financial statements of Artificial Ltd and its subsidiary Intelligence Ltd have been extracted from their financial records at $30$ June $2023.$

The accounts of the two companies are presented below.

Artificial Ltd

$ Intelligence Ltd

$

Sales $839250725000$

Cost of goods sold $(580000)(297500)$

Gross profit $259250427500$

Dividends revenue $116250-$

Management fee revenue $33125-$

Gain on sale of plant $43750$

$452375427500$

Less Expenses

Administrative expenses $(38500)(48375)$

Depreciation $(30625)(71000)$

Management fee expense $-(33125)$

Other expenses $(126375)(96250)$

Profit before tax $256875178750$

Tax expense $7687552750$

Profit after tax $180000126000$

Retained earnings $1$ July $2022399250299000$

$579250425000$

Dividends paid $(171750)(116250)$

Retained earnings $30$ June $2023407500308750$

$$

Statement of financial position Artificial Ltd

$ Intelligence Ltd

$

Shareholders$$ equity

Retained earnings $407500308750$

Share capital $437500250000$

Liabilities

Accounts payable $-57875$

Tax payable $10000031250$

Non$-$current liabilities

Loans $236000145000$

$1181000792875$

Assets

Accounts receivable $7425077875$

Inventory $11500036250$

Non$-$current assets

Land and buildings $198750407500$

Plant $$ at cost $400000444750$

Accumulated depreciation $(107000)(173500)$

Investment in Intelligence Ltd $500000-$

$1181000792875$

Other information:

$$ Artificial Ltd acquired its $100$ percent interest in Intelligence Ltd on $1$ July $2016$ seven years earlier. The cost of the investment was $$500000.$ At that date the capital and reserves of Intelligence Ltd were: $

Share capital $250000$

Retained earnings $200000$

$450000$

At the date of acquisition all assets were considered to be fairly valued.

$$ In applying the impairment test for goodwill in the current year, the directors have determined that a write$-$down of $$3750$ is required for consolidation purposes. The cumulative goodwill impairment write$-$downs for prior years amounted to $$20000.$

$$ During the year Artificial Ltd made total sales to Intelligence Ltd of $$81250,$ while Intelligence Ltd sold $$65000$ in inventory to Artificial Ltd$.$

$$ The opening inventory in Artificial Ltd at $1$ July $2022$ included inventory acquired from Intelligence Ltd for $$52500$ that cost Intelligence Ltd $$43750$ to produce.

$$ The closing inventory in Artifical Ltd includes inventory acquired from Intelligence at a cost of $$42000.$ This cost Inteligence Ltd $$35000$ to produce.

$$ The closing inventory of Intelligence Ltd includes inventory acquired from Artificial Ltd at a cost of $$15000.$ This cost Artificial Ltd $$12000$ to produce.

$$ An item of plant and equipment owned by Artificial Ltd was sold to Intelligence Ltd on $1$ July $2022$ for $$145000$ when its carrying amount was $$101250($cost $$168750,$ accumulated depreciation of $$67500).$ This plant is assessed as having a remaining useful life of six years. The Group has a policy of measuring its property, plant and equipment using the $$cost model$.$

$$ Intelligence paid management fees to Artificial Ltd$.$

$$ The tax rate is $30\%.$

Required

$1.$ Prepare an acquisition analysis.

$2.$ Prepare the consolidation journal entries necessary to prepare consolidated accounts for the year ending $30$ June $2023$ for the group comprising Artificial Ltd and Intelligence Ltd$.$ Provide a brief explanation $(3-4$ lines$)$ for each of the consolidation journal entries, explaining why the entry is being made.

$3.$ Prepare the consolidation worksheet for the preparation of the consolidated financial statements for the period ended $30$ June $2023.$ Prepare the consolidated statement of profit or loss only for the year ended $30$ June $2023.$

$4.$ Following consolidation, should dividends paid to the parent entity by its subsidiaries be shown in the economic entity$$s financial statements? In the consolidated financial statements, which dividends would be shown?

$5.$ If a subsidiary sells inventory to the parent entity and some of the inventory is still on hand at year end, what adjustments are necessary at year end? Further, will adjustments be required to restate the balance of opening inventory as at the beginning of the next financial period?