The Earth Group carries on business as a distributor of warehouse equipment and importer of fruits into the country. Ear

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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

12,125

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
,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 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.
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