The Indegenous Group carries on business as a distributor of warehouse equipment and importer of fruit into the country. Indegenous was incorporated in 20X1 to distribute warehouse equipment. It diversified its activities during 20X3 to include the import and distribution of fruit, and expanded its operations by the acquisition of shares in Melon in 20X5 and in Kiwi in 20X7. Accounts for all companies are made up to 31 December. The draft income statements for Indegenous, Melon and Kiwi for the year ended 31 December 20X9 are as follows. Revenue Indegenous R'000 45,600 Melon R'000 24,700 Kiwi R'000 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 expense 8,300 5,390 4,241 Profit for the year 12,125 10,760 9,439 Page 4 of 9 Dividends paid and declared for the period 9,500 The draft statements of financial position as at 31 December 20X9 are as follows. Non-current assets Indegenous R'000 Melon R'000 Kiwi R'000 Property, plant and equipment (NBV) Investments Shares in Melon 35,483 6,650 24,273 13,063 Shares in Kiwi 3,800 42,133 28,073 13,063 Current assets 1,568 9,025 8,883 Equity 43,701 37,098 21,946 R1 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 Indegenous, Melon and Kiwi. (a) On 1 January 20X5 Indegenous acquired 2,700,000 R1 ordinary shares in Melon for R6,650,000 at which date there was a credit balance on the retained earnings of Melon of R1,425,000. No shares have been issued by Melon since Indegenous acquired its interest. (b) On 1 January 20X7 Melon acquired 1,600,000 R1 ordinary shares in Kiwi for R3,800,000 at which date there was a credit balance on the retained earnings of Kiwi of R950,000. No shares have been issued by Kiwi since Melon acquired its interest. (c) During 20X9, Kiwi had made intragroup sales to Melon of R480,000 making a profit of 25% on cost and R75,000 of these goods were in inventories at 31 December 20X9. (d) During 20X9, Melon had made intragroup sales to Indigenous of R260,000 making a profit of 331/3% on cost and R60,000 of these goods were in inventories at 31 December 20X9. (e) On 1 November 20X9 Indigenous sold warehouse equipment to Melon for R240,000 from inventories. Melon has included this equipment in its property, plant and equipment. The equipment had been purchased on credit by indigenous for R200,000 in October 20X9 and this amount is included in its current liabilities as at 31 December 20X9. (f) Melon charges depreciation on its warehouse equipment at 20% on cost. It is company policy to charge a full year's 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. Page 5 of 9 (h) It is the group's policy to value the non-controlling interest at fair value at the date of acquisition. The fair value of the non-controlling interests in Melon on 1 January 20X5 was R500,000. The fair value of the 28% non-controlling interest in Kiwi on 1 January 20X7 was R900,000. Required Prepare for the Indigenous Group: (a) A consolidated income statement for the year ended 31 December 20X9 (25 marks)