1. The statements of financial position for Piano Plc, Flute Ltd and Drum Ltd as at 31 December 2016 are given below:

Piano Plc acquired 80% of Flute Ltd on 1 January 2012 for £1,380,000 when Flute Ltd's share capital and reserves were £960,000. The fair value of Flute Ltd’s non-current assets (land) on 1 January 2012 was £3,000,000 and this revaluation has not been incorporated into Flute Ltd’s accounts.

Piano Plc also acquired 90% of the bonds in Flute Ltd on 1 January 2012. No goodwill arose on this acquisition.

Piano Plc acquired 30% of Drum Ltd on 1 January 2014 for £1,200,000 when Drum Ltd’s share capital and reserves were £900,000. The fair value of Drum Ltd’s non-current assets on 1 January 2014 was £2,400,000 and this revaluation has not been incorporated into Drum Ltd’s accounts.

Piano Plc’s policy is to capitalise goodwill. Impairment of 20% of the goodwill on the shares in Flute Ltd and impairment of 20% of the goodwill on the shares of Drum Ltd arise in 2016.

In 2016, Piano Plc acquired inventory from Flute Ltd for £150,000 which had cost Flute Ltd £130,000 and inventory from Drum Ltd for £300,000 which had cost Drum Ltd £150,000. This inventory remains unsold at the statement of financial position date.

Bond interest of 10% per annum has not been paid by Piano Ltd and Flute Ltd at the year end. Neither company has accounted for the interest receivable or payable in relation to bonds.

Required:

Prepare the consolidated statement of financial position for Piano Plc as at 31 December 2016, showing workings for the consolidated retained earnings.