I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

PART G: PREPARING SIMPLE CONSOLIDATED FINANCIAL STATEMENTS 

 

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2.1 Example: intra-group trading 

Suppose in our earlier example (Section 1.1) that S Co had recorded sales of $5,000 at a gross margin 

of 40% to P Co during 20X1. 50% of the goods remained in P Co's inventories at  

31 December 20X1. Prepare the revised consolidated statement of profit or loss. 

Solution 

The consolidated statement of profit or loss for the year ended 31 December 20X1 would now be as follows. 

 

 

$      

Revenue (75 + 38 – 5*) 

 

108,000 

Cost of sales (30 + 20 – 5* + 1(W)) 

 

 46,000 

Gross profit (45 + 18 – 1(W)) 

 

62,000 

Administrative expenses 

 22,000 

Profit before taxation 

 

40,000 

Income taxes 

 12,000 

Profit for the year 

 28,000 

 

Profit attributable to: 

 

 

   Owners of the parent (balancing figure) 

  

26,250 

 

   NCI ((25%  8,000) – 250(W)) 

 

  1,750 

 

  

28,000 

Movement on retained earnings 

 

Group profit for year 

 

26,250

 

Retained earnings brought forward 

 

  99,750 

Retained earnings carried forward 

 

126,000 

* to remove the intra-group sale 

Working 

 

Provision for unrealised profit 

 

 

 

 

 

$      

 

Sale price  

 

100% 

5,000 

 

Cost price  

  60% 

 

 (3,000) 

 

Gross profit  

 

40% 

 2,000 

 

 

 

 

 

Unrealised profit (2,000  50%) 

 1,000 

 

Unrealised profit attributable to NCI (1,000  25%) 

 250 

As we saw in the last chapter, a provision will be made for the unrealised profit against the group 

inventories figure in the consolidated statement of financial position.