P Co acquired interests in Silver Co. The current financial statements are shown below. All figures are in dollars, unless as otherwise indicated.

Additional information

1. The under-valued inventory of Silver was disposed as follows:
60% was sold to third party customers by 31 December 20x5.
20% was sold to third party customers during 20x6.
10% was destroyed by floods during 20x6.
10% remained unsold at 31 December 20x6.

2. On 1 July 20x6, Silver Co transferred the following inventory to P Co:

3. On 1 January 20x5, Silver Co borrowed a long-term loan of $20,000,000 from an unrelated bank.
From the proceeds of the external loan, Silver Co extended to P Co a loan of $10,000,000 on 1 July 20x5 to build a warehouse, and $2,000,000 to finance the purchase of inventories. The construction of the warehouse was completed on 30 September 20x6. The estimated useful life of the warehouse was ten years.
Details of the borrowings were as follows

4. Apply a tax rate of 20% on all appropriate adjustments. Recognize tax effects on fair value adjustments.
Companies recognize impairment losses, if any, at the financial year-end.

Required

1. Prepare consolidation adjusting entries for the year ended 31 December 20x6.

2. Perform an analytical check on the balance of non-controlling interests as at 31 December 20x6.
3. Perform an analytical check on the balance of consolidated retained earnings as at 31 December 20x6.

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Income Statement for year ended 31 December 20x6 P Co Profit before tax. Tax... Profit after tax. Dividends declared. Profit retained.. Retained earings, 1 Jan 20x6. Retained earnings, 31 Dec 20x6. Silver Co 3,000,000 2,000,000 (600,000) (400,000) 2,400,000 1,600,000 (220,000) (100,000) 2,180,000 1,500,000 5,500,000 1,600,000 7,680,000 3,100,000