Retic Ltd. acquired 100% of the share capital of Dorado Ltd. for $102,000 on January 1, 2011, when the equity of Dorado consisted of:

Share capital€”50,000 shares........ $50,000

Retained earnings ............ 30,000

All of Dorado€™s identifiable assets and liabilities were recorded at amounts equal to fair value, except as follows:

The plant is expected to have a further useful life of five years. All the inventory on hand at January 1, 2011, was sold by December 31, 2011. The income tax rate is 40%. At December 31, 2013, the following information was obtained from both entities.

Required
(a) Prepare the consolidation process adjustments for the preparation of consolidated financial statements for Retic and its subsidiary, Dorado, as at January 1, 2011.
(b) Prepare the consolidated financial statements for Retic and its subsidiary, Dorado, as at December 31, 2013.

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nventory Plant (cost $80,000) Carrying amount $20,000 60,000 Fair value $25,000 70,000 Retic Dorado 50,000 40,000 15,000 Profit before tax Income tax expense Profit Retained earnings (1/1/13) Retained earnings (31/12/13) Share capital Retained earnings 25,000 35,000 60,000 50,000 60,000 110,000 10,000 5,000 15,000 $330,000 $125,000 $.13,000 14,000 25,000 50,000 20,000 30,000 65,000 95,000 150,000 95,000 245,000 65,000 20,000 85,000 Total equity Provisions Payables Total liabilities Total equity and liabilities Cash Accounts receivable Inventory Investment in Dorado Ltd Plant net Total assets 30,000 70,000 102,000 115,000 36,000 00 $125,000 $330,0