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.

MINDY

On 1 January 20X9, Mindy acquired 80% of the equity share capital of Zelner in a share exchange of two shares in Mindy for three shares in Zelner. The issue of shares has not yet been recorded by Mindy. At the date of acquisition shares in Mindy had a market value of $6 each. Below are the summarised draft financial statements of both entities. A. Statement of profit or loss for the year ended 31 December 20X9  Mindy Zelner$000 $000 Revenue 102,000 49,200 Cost of sales (59,900) (31,000) ––––––– –––––– Gross profit 42,100 18,200 Distribution costs (8,000) (5,000) Administrative expenses (11,900) (9,000) Finance costs (4,200) (980) ––––––– ––––––– Profit before tax 18,000 3,220 Income tax expense (6,040) (1,000) ––––––– ––––––– Profit for the year 11,960 2,220 ––––––– ––––––– Statements of financial position as at 31 December 20X9  Assets Mindy$000 Zelner $000 Non‐current assets Property, plant and equipment 70,500 24,600 Current assets Total assets Equity and liabilities 25,000 –––––––95,500 ––––––– 9,500 –––––––34,100 ––––––– Equity shares of$1each 60,000 9,000 Retained earnings     Non‐current liabilities: 11,200 –––––––71,200 4,130 –––––––13,130 10% loan notes 15,000 20,000 Current liabilities   Total equity and liabilities 9,300 –––––––95,500 ––––––– 970 –––––––34,100 –––––––

The following information is relevant:

1. At the date of acquisition, the fair values of Zelner’s net assets were equal to their carrying amounts.
2. Sales from Zelner to Mindy in the post‐acquisition period were $7million. Zelner made a mark up on cost of 25% on these sales. One quarter of these goods remained in the inventory of Mindy at the year‐end. 3. Other than where indicated, statement of profit or loss items are deemed to accrue evenly on a time basis. 4. At 31 December 20X9, Zelner had a receivable due from Mindy of$1 million. This agreed with the amount payable to Zelner in Mindy's financial statements.
5. Mindy has a policy of accounting for any non‐controlling interest at fair value. The fair value of the non‐controlling interest at the acquisition date was \$9.9 million. Consolidated goodwill was not impaired at 31 December 20X9.

Required:

A. Prepare the consolidated statement of profit or loss for Mindy for the year ended 31 December 20X9