Set out below are the financial statements of Ant Co., its subsidiary Bug Co. and an associated company Nit Co. for the accounting year-end 31 December 20X9.
Ant Co. acquired 80% of the shares in Bug Co. on 1 January 20X7 when the balance on the retained earnings of Bug Co. was $45,000 and the balance on the general reserve of Bug Co. was $12,000. The fair value of the non-controlling interest in Bug on 1 January 20X7 was $21,000. Group policy is to measure non-controlling interests using Method 2. Ant Co. also acquired 25% of the shares in Nit Co. on 1 January 20X8 when the balance on Nit’s retained earnings was $22,500 and the general reserve $6,000.
During the year Ant Co. sold Bug Co. goods for $12,000, which included a markup of one-third. 90% of these goods were still in inventory at the end of the year.
(a) Prepare a consolidated statement of income for the year ending 31/12/20X9, including the associated company Nit’s results.
(b) Prepare a consolidated statement of financial position at 31/12/20X9, including the associated company.
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