The following are the financial statements of the parent company Swish plc, a subsidiary company Broom and an associate company Handle.

Swish acquired 90% of the shares in Broom on 1 Januar y 20X1 when the balance on the income statement of Broom was £60,000 and the balance on the general reser ve of Broom was £16,000. Swish also acquired 25% of the shares in Handle on 1 Januar y 20X2 when the balance on Handle’s accumulated retained profits was £30,000 and the general reser ve £8,000.
During the year Swish sold Broom goods for £16,000, which included a mark-up of one-third. 80% of these goods were still in inventor y at the end of the year.

Required:

(a) Prepare a consolidated income statement, including the associated company Handle’s results, for the year ended 31 December 20X3.

(b) Prepare a consolidated balance sheet as at 31 December 20X3.

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Balance sheets as at 31 December 20X3 Swish Broom Handle ASSETS Non-current assets Property, plant and equipment at cost 320,000 180,000 100,000 Depreciation 200,000 70,000 21,000 120,000 110,000 79,000 Investment in Broom 140,000 Investment in Handle 40,000 Current assets Inventories 120,000 60,000 36,000 Trade receivables 130,000 70,000 36,000 Current account - Broom 15,000 Current account - Handle 3,000 Bank 24,000 7,000 6,000 Total current assets 292,000 137,000 78,000 Total assets 592,000 247,000 157,000 EQUITY AND LIABILITIES l shares 250,000 60,000 50,000 General reserve 30,000 20,000 12,000 Retained earnings 150,000 120,000 50,000 430,000 200,000 112,000 Current liabilities Trade payables 132,000 25,000 34,000 Taxation payable 30,000 7,000 8,000 Current account - Swish 15,000 3,000 Total equity and liabilities 592,000 247,000 157,000