P Co acquired an interest in X Co and Z Co. Details of the acquisitions are as follows:

Additional information

(a) Undervalued inventory was sold in 20x4.

(b) Unrecognized intangible asset of Z Co was impaired in 20x5 to the extent of 20% of its original fair value. This was unrecognized in the separate financial statements.

(c) X Co transferred its fixed asset to P Co on 1 January 20x4. Details are as follows

(d) X Co purchased inventory from P Co on 15 December 20x5. Details are as follows

(e) Sales between P Co and Z Co are as follows

(f) Assume a tax rate of 20%. Recognize tax on fair value adjustments.

Required

1. Prepare the consolidation and equity accounting entries for the year ended 31 December 20x5.
2. Perform an analytical check on the non-controlling interests’ balance as at 31 December 20x5.
3. Perform an analytical check on the investment in associate balance as at 31 December 20x5.

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Date of acquisition... Percentage acquired by P Co. Percentage acquired by P Co... Shareholders' equity at date of acquisition: Share capital..... Retained earnings. The fair value and book value of assets at acquisition date are shown below: X Co Book value $ 100,000 X Co Fair value $ 150,000 1,400,000 $1,500,000 X Co 1 Jan 20x3 90% 1,400,000 $1,550,000 $ 200,000 Inventory. Intangibles Other identifiable net assets....... Total identifiable net assets.. Fair value of non-controlling interests The financial statements for the year ended 31 December 20x5 are shown below: z Co Book value $ 500,000 $ 300,000 1,000,000 800,000 $1,500,000 $1,100,000 Z Co 1 Jan 20x4 $1,100,000 $1,100,000 30% Z Co Fair value $ 200,000 1,100,000 $1,300,000