On 1 January 20x4, P Co acquired 90% of S Co. Details of S Co as at the date of acquisition are as follows:

Remaining useful life for the fixed assets as at acquisition date was five years and residual value of the fixed assets was zero. Fair value of non-controlling interests as at acquisition date was $345,000. The financial statements of P Co and S Co for the year ended 31 December 20x5 are shown below. Assume a tax rate of 20%
throughout.

Required:
1. Prepare the consolidation adjustments for the year ended 31 December 20x5.
2. Prepare the consolidation worksheets for the year ended 31 December 20x5.
3. Reconcile the non-controlling interests’ balance as at 31 December 20x5.

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Share capital. Retained earnings as at 1 January 20x4. Fair value was different from book value of the following assets of S Co: Fixed assets. Fair value $900,000 $1,000,000 150,000 $1,150,000 Book value $800,000