Following are the financial statements relating to Black, a limited liability company, and its subsidiary Bury.

The following information is also available:

(a) Black purchased its ordinary shares in Bury on 1 November 2006 when Bury’s balance in General reserves was £0.5 million and the balance in Accumulated profit was £1.5 million.

(b) At 1 November 2009 the goodwill arising from acquisition of Bury was valued at £6,000,000. Black’s impairment review of this goodwill at 31 October 2010 valued it at £5,000,000.

(c) During the year ended 31 October 2010 Black sold goods which originally cost £12 million to Bury. Black invoiced Bury at cost plus 40%. Bury still has 30% of these goods in inventory as at 31 October 2010.

(d) Bury owed Black £1.5 million at 31 October 2010 for some goods Black supplied during the year.

(e) Value the non-controlling interest in Bury on the date of acquisition in proportion to the amount paid for control by Black.

Required:

(a) Calculate the goodwill arising on acquisition of Bury.

(b) Prepare the Consolidated Statement of income for the year ended 31 October 2010.

(c) Prepare the Consolidated Statement of financial position as at 31 October 2010.

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Statement of income year ended 31.Oct.2010 Sales revenue Cost of sales Gross profit Distribution cost Administrative expense Profit from operations Dividend from Bury Profit before tax Tax Net profit for the year Black Bury £'000 245,000 95,000 (140,000) (52,000) £'000 38,000 7,000 105,000 43,000 (12,000) (10,000) (55,000) (13,000) 20,000 45,000 20,000 (13,250) (5,000) 31,750 15,000