|
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
BPP Tutor Toolkit Copy
PART G: PREPARING SIMPLE CONSOLIDATED FINANCIAL STATEMENTS
450
Working
Intra-group sale
$
Sale price
100% 25,000
Cost price
80%
(20,000)
Gross profit
20% 5,000
Unrealised profit
5,000
* Because the sale was made from the parent, Percy, to the subsidiary, Mercy, there is no unrealised
profit attributable to the NCI.
3
Acquisitions part way through the year
If a subsidiary is acquired during the year, only the post-acquisition element of the statement of profit or
loss balances is included on consolidation.
We have seen in the last chapter that retained earnings in the consolidated statement of financial
position comprise:
(a)
The whole of the parent company's retained earnings
(b) The
group's share of post-acquisition retained earnings in the subsidiary
From the total retained earnings of the subsidiary we must therefore exclude both the NCI's share of total
retained earnings and the group's share of pre-acquisition retained earnings.
A similar procedure is necessary in the consolidated statement of profit or loss if it is to link up with the
consolidated statement of financial position.
As we have seen in the last chapter, if the subsidiary is acquired part way through the accounting year,
it is necessary to split the profits earned between those earned pre-acquisition and those earned post-
acquisition.
So we must first split the entire statement of profit or loss of the subsidiary between pre-acquisition and
post-acquisition proportions. Only the post-acquisition figures are included in the consolidated statement
of profit or loss. Try the following question.
EXAM FOCUS POINT
A past exam included a question on the consolidated statement of profit or loss where a subsidiary was
acquired part way through the year. It was one of the three questions with the lowest pass rates on the
exam, so make sure that you understand the answer to the following question.
BPP Tutor Toolkit Copy
CHAPTER 25
//
THE CONSOLIDATED STATEMENT OF PROFIT OR LOSS
451
QUESTION
Acquisition part way through the year
P Co acquired 60% of the equity of S Co on 1 April 20X5. The statements of profit or loss of the two
companies for the year ended 31 December 20X5 are set out below.
P Co
S Co
S Co (
9
/
12
)
$
$
$
Revenue
170,000
80,000
60,000
Cost of sales
65,000
36,000
27,000
Gross profit
105,000
44,000
33,000
Administrative expenses
43,000
12,000
9,000
Profit before tax
62,000
32,000
24,000
Income taxes
23,000
8,000
6,000
Profit for the year
39,000
24,000
18,000
Note.
Retained earnings brought forward
81,000
40,000
Retained earnings carried forward
108,000
58,000
Required
Prepare the consolidated statement of profit or loss and movements on retained earnings.
ANSWER
The shares in S Co were acquired three months into the year. Only the post-acquisition proportion (nine
months' worth) of S Co's statement of profit or loss is included in the consolidated statement of profit or
loss. This is shown above for convenience; in your exam, you will have to calculate the proportion to
include.
P CO
CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 DECEMBER 20X5
$
Revenue (170 + 60)
230,000
Cost of sales (65 + 27)
92,000
Gross profit
138,000
Administrative expenses (43 + 9)
52,000
Profit before tax
86,000
Income taxes (23 + 6)
29,000
Profit for the year
57,000
Profit attributable to:
Owners of the parent (bal. fig.)
49,800
NCI (40% 18,000)
7,200
57,000
Movement on retained earnings
Group profit for year
49,800
Retained earnings brought forward*
81,000
Retained earnings carried forward
130,800
* All of S Co's retained earnings brought forward are pre-acquisition.
BPP Tutor Toolkit Copy
Do'stlaringiz bilan baham: |
