On January 1, 2013, Lessard acquired 80% of the share capital of Honey for $264,800. This was sufficient for Lessard to gain control over Honey. On that date, the statement of financial position of Honey consisted of:

Share capital ..........$250,000

Retained earnings....... 18,000

Liabilities........... 197,000

............... $465,000

Cash............ $ 35,000

Inventories.......... 70,000

Land ............ 65,000

Plant and equipment€”net... 170,000

Trademark.......... 100,000

Goodwill .......... 25,000

...............$465,000

All of Honey€™s identifiable assets and liabilities were recorded at fair value except for:

All of Honey€™s identifiable assets and liabilities were recorded at fair value except for:

Additional information:
1. The plant and equipment had a further five-year life and was expected to be used evenly over that time. The trademark was considered to have an indefinite life.
2. Lessard uses the partial goodwill method.
3. During the year ended December 31, 2013, all inventories on hand at the beginning of the year were sold, and the land was sold on October 1, 2013, to another company for $80,000.
4. The income tax rate is assumed to be 40%.
5. During the current year, Honey sold a quantity of inventory to Lessard for $8,000. The original cost of these items to Honey was $5,000. One third of this inventory was still on hand at the end of the year.
6. On January 1, 2013, Honey transferred an item of plant with a carrying amount of $10,000 to Lessard for $15,000.
The item was still on hand at the end of the year. Honey depreciates the plant straight line over five years.
7. On January 1, 2014, Honey issued additional shares, which caused Lessard€™s ownership to decrease to 75%. Honey now has shares of $300,000.
8. Financial information for Lessard and Honey for the year ended December 31, 2013, is shown below.

Required
(a) Prepare the consolidated statement of comprehensive income and statement of changes in equity for Lessard and its subsidiary at December 31, 2013. Lessard€™s share capital at December 31, 2013 is $300,000.
(b) Calculate the adjustments to be made to the following accounts on the statement of financial position accounts as at December 31, 2013 with respect to the Honey net assets that would be included on the Lessard consolidated financial statements:
€¢Plant and Equipment (net)
€¢Inventory
Goodwill
€¢ Non-controlling Interest
(c) Calculate the effect on consolidated equity of the issuance of the additional shares on January 1, 2014.

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Inventories Land Plant and equipment (cost $200,000) Trademark Carrying amount $70,000 65,000 170,000 100,000 Fair value 80,000 85,000 190,000 110,000 Lessard Honey $200,000 85,000 285,000 162,000 53,000 215,000 70,000 20,000 50,000 30,000 80,000 12,000 6,000 18,000 62,000 $172,000 35,000 207,000 128,000 31,000 159,000 48,000 18,000 30,000 18,000 48,000 10,000 4,000 14,000 34,000 Sales revenue Other income Cost of sales Other expenses Income before tax Income tax expense Net income Retained earnings (1/1/13) Interim dividend paid Final dividend declared Retained earnings (31/12/13)