Reference no: EM132697471
Sienna Ltd Amber Ltd
Equity Share capital $ 320 000 $ 120 000
General reserve 60 000 20000
Retained earnings 34 800 35 000
Other components of equity 8 000 2 000
Total equity $ 422 800 $ 177 000
Additional information
(a) At 1 July 2015, all identifiable assets and liabilities of Amber Ltd were recorded at fair values except for inventory, for which the fair value was $1000 greater than the carrying amount. This inventory was all sold by 30 June 2016. At 1 July 2015, Amber Lid had research and development outlays that it had expensed as incurred. Sienna Ltd measured the fair value of the in-process research and development at $8000. By 30 June 2016, it was assessed that $2000 of this was not recoverable. At 1 July 2015, Amber Lid had reported a contingent liability relating to a guarantee that was considered to have a fair value of $7000. This liability still existed at 30 June 2016. At 1 July 2015, Amber Ltd had not recorded any goodwill.
(b) The debentures were issued by Amber Lid at nominal value on 1 July 2014, and are redeemable on 30 June 2020. Sienna Ltd acquired its holding ($60 000) of these debentures on the open market on 1 January 2016, immediately after the half-yearly interest payment had been made. All interest has been paid and brought to account in the records of both entities.
(c) During the 2015-16 period, Sienna Ltd sold inventory to Amber Lid for $40 000, at a mark-up of cost plus 25%. At 30 June 2016, $10 000 worth of inventory was still held by Amber Ltd.
(d) The Other Components of Equity account relates to the financial assets. For the 2015-16 period, Sienna Ltd recorded an increase in these assets of $3000, and Amber Ltd recorded a decrease of $2000.
(e) The income tax rate is 30%.
Required
Problem 1: Prepare the consolidated financial statements for Sienna Lid and its subsidiary for the year ended 30 June 2016.