prepare consolidated statement of financial position

The Cellino is one of the biggest and well-known groups and consists of 3 subsidiaries. The
following information is given to you for the Cellino and its another subsidiary, Felli:

Statements of profit or loss for the year ended 31 August 20X9
Cellino Felli
$000 $000
Revenue 125,000 77,900
Cost of sales (65,000) (38,500)
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Gross profit 60,000 39,400
Distribution costs (6,750) (8,050)
Administrative expenses (17,500) (9,780)
Finance costs – (20)
Income from Felli: Loan note interest 15 –
Dividends 5,200 –
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Profit before tax 40,965 21,550
Income tax expense (19,250) (10,850)
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Profit for the year 21,715 10,700
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The following information is also available:

I. The Cellino purchased 80% of the ordinary share capital of the Felli on 1 September
20X8 for $34,000,000. At that date, Felli’s equity consisted of 23,150,000 $1 equity
shares and retained earnings of $5,338,000.
II. It is group policy to value the non-controlling interest at fair value. The fair value of the
non- controlling interest at the acquisition date was $7,408,000.
III. Cellino owns $150,000 of Felli’s $200,000 loan notes. The annual interest rate on the
loan notes is 10%.
IV. During the year ended 31 August 20X9 Cellino sold goods to Felli for $15,000,000.
Cellino made a profit on these goods of $2,500,000. Felli still has all of these goods in
inventory at 31 August 20X9.
V. All Felli’s dividends of $6,500,000 were paid in the financial year ended 31 August 20X9.

Required:
a) Calculate the goodwill arising on the acquisition of Felli as at 1 September 20X8.
b) Prepare the consolidated statement of profit or loss for Cellino and its subsidiary for
the year ended 31 August 20X9.