P Co acquired interests in X Co and Z Co. Their current financial statements are shown below. All figures are in dollars, unless otherwise indicated.

Fair and book values of identifiable net assets of each company as at date of acquisition:

Additional information:

(a) The undervalued inventory of X Co was disposed off as follows:

(b) The remaining useful life of the undervalued fixed assets of Z Co as at the date of acquisition was ten years, with negligible residual value.

(c) During 20x1, X Co sold inventory to P Co at an invoiced price of $200,000. The carrying amount and original cost of the inventory was $150,000. Subsequently:

(d) On 1 July 20x2, P Co sold equipment to X Co. The following information relates to the equipment at the date of transfer:

(e) P Co, as landlord, rented an office building to X Co on a short-term basis. Rental income and rental expense were recognized by P Co and X Co as follows:

(f) P Co transferred equipment to Z Co at transfer price of $150,000. The net book value of the equipment was $120,000 on 1 July 20x1, the date of transfer. The remaining useful life of the equipment was five years from 1 July 20x1.
(g) Apply a tax rate of 20% on all appropriate adjustments. Recognize tax effects on fair value adjustments. The legal entities recognize impairment losses as and when these arise.

Required
1. Prepare consolidation adjusting entries for the year ended 31 December 20x2, with narratives (brief headers) in accordance with IFRS 3 and IFRS 10.
2. Prepare equity accounting entries for the year ended 31 December 20x2, with narratives (brief headers) in accordance with IAS 28.
3. Perform an analytical check on the balance in non-controlling interests as at 31 December 20x2.
4. Perform an analytical check on the balance of the investment in associate account as at 31 December 20x2.
5. Perform an analytical check on consolidated retained earnings as at 31 December 20x2.

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Profit before tax. Tax... Profit after tax.. Income Statement and Partial Statement of Changes in Equity For Year Ended 31 December 20x2 P Co Dividends declared. Retained profit.. Retained earnings, 1 Jan 20x2. Retained earnings, 31 Dec 20x2. X Co Z Co $2,800,000 $800,000 $ 900,000 (560,000) (160,000) (189,000) $2,240,000 $640,000 $ 711,000 (120,000) (40,000) (100,000) $2,120,000 $600,000 $ 611,000 1,000,000 520,000 300,000 $3,120,000 $1,120,000 $911,000