1 Groups and consolidation: an overview

QUESTION 
Intra-group trading I
 
Pumpkin has held 90% of the equity share capital of Squash for many years. Cost of sales for each entity 
for the year ended 31 December 20X3 was as follows. 
$ 
Pumpkin 100,000 
Squash 80,000 
During the year, Squash sold goods costing $5,000 to Pumpkin for $8,000. At the year end, all these 
goods remained in inventory.
(a) 
What figure should be shown as cost of sales in the consolidated statement of profit or loss of the 
Pumpkin group for the year ended 31 December 20X3?
$
A 172,000 
B 175,000 
C 180,000 
D 183,000 
(b) 
If Squash's profit for the year was $16,000, what is the profit attributable to the NCI?
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CHAPTER 25
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THE CONSOLIDATED STATEMENT OF PROFIT OR LOSS
 
449 
ANSWER 
(a) B 
$ 
Pumpkin 
100,000 
Squash 
80,000 
180,000 
Less intra-group sales 
(8,000) 
Add unrealised profit 
3,000 
175,000 
(b) 
Profit attributable to the NCI = (16,000 – 3,000 unrealised profit) 

10% = $1,300 
QUESTION 
Intra-group trading II
 
Percy has held 75% of the equity share capital of Mercy for many years.
Draft summarised statements of profit or loss for Percy and Mercy for the year ended 31 December 20X3 
are below.
STATEMENTS OF PROFIT OR LOSS AT 31 DECEMBER 20X3 
Percy 
Mercy 
$ 
$ 
Revenue 
500,000 
300,000 
Cost of sales 
300,000
200,000
Gross profit 
200,000 
100,000 
Administrative expenses 
90,000
45,000 
Profit before taxation 
110,000
55,000 
Income taxes 
10,000
5,000 
Profit for the year 
100,000
50,000 
During the year, Percy sold goods which cost $20,000 to Mercy at a margin of 20%. At the year end, all 
of these goods remained in inventory.
Required 
Prepare the consolidated statement of profit or loss for the Percy group as at 31 December 20X3. 
ANSWER 
PERCY GROUP 
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AT 31 DECEMBER 20X3 
$ 
Revenue (500 + 300 – 25(W)) 
775,000 
Cost of sales (300 + 200 – 25(W) + 5(W)) 
480,000
Gross profit (200 + 100 – 5(W)) 
295,000
Administrative expenses (90 + 45)
135,000
Profit before taxation
160,000
Income taxes (10 + 5)
15,000
Profit for the year 
145,000
Profit attributable to: 
Owners of the parent (bal. fig.) 
132,500
NCI (25% 

50)* 
12,500
145,000
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