AC is a listed entity that has made several investments in recent years, including investments in BD and CF. The financial assistant of AC has prepared the accounts of AC for the year ended 31 December 2008. The financial assistant is unsure of how the investments should be accounted for and is not sufficiently experienced to prepare the consolidated financial statements for the AC group.
The summarized balance sheets of AC, BD and CF are given below.

Additional information
Investments
AC acquired 14 million $1 ordinary shares in BD on 1 March 2003 for $18 million. At the date of acquisition BD had retained earnings of $3 million and a balance of $1 million on revaluation reserve.
On 1 July 2008, AC acquired a further 20% stake in BD for $7 million. BD made profit of $1.6 million in the year to 31 December 2008 and profits are assumed to accrue evenly throughout the year.
AC acquired 40% of the $1 ordinary share capital of CF on 1 February 2005 at a cost of $7 million. The retained earnings of CF at the date of acquisition totalled $6 million.
The remaining investment relates to an available for sale investment. The investment has a market value of $2-6 million at 31 December 2008. The financial assistant was unsure of how this investment should be treated, so the investment is included at its original cost.
CF revalued a property during the year resulting in a revaluation gain of $1 million. There were no other revaluations of property, plant and equipment in the year for the other entities in the group. All revaluations to date relate to land, which is not depreciated in accordance with group policy.
During the period, AC sold goods to CF with a sales value of $800 000. Half of the goods remain in inventories at the year end. AC made 25% profit margin on all sales to CF.
An impairment review was performed in the period and it was estimated that the goodwill arising on the acquisition of CF was impaired by 30%.
Required:
(a) Explain how each of the three investments held by AC should be accounted for in the consolidated financial statements.
(b) Prepare the consolidated balance sheet of the AC group as at 31 December 2008.

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AC BD 5000 CF 5000 Summanized balance sheets Assets Non-current assets Property, plant and 25 700 28 000 15 000 equipment Investments Current assets 34 300 17 000 77.000 14 000 42 000 6 000 21 000 Equity and liabilities Equity Share capital ($1 ordinary 8000 1 000 9 000 30 000 20000 shares) Revaluation reserve Other reserves Retained eamings 3 000 1000 22 000 56 000 6 000 5 000 77000 1 000 9 D00 30 000 4 000 8 000 42 000 18 000 Non-current liabilities Current liabilities 3 000 21 000