N1612 week 5 workshop
Exercise 1. P ltd acquired 80% of the share capital of S ltd on 1 January 2023. The individual company statement of profit or loss for the year ending on 31 Dec 2023 are shown below:
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P Ltd
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S Ltd
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Revenue
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100,000
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50,000
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Cost of sales
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(50,000)
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(25,000)
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|
Gross Profit
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50,000
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25,000
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Operating expenses
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(30,000)
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(10,000)
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Profit from operations
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20,000
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15,000
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Finance income
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4,000
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-
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Finance cost
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(6,000)
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(4,000)
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Profit before Tax
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18,000
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11,000
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Tax
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(7,000)
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(1,000)
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Profit for the year
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11,000
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10,000
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Required
Prepare the consolidated statement of profit or loss for the year ended on 31 Dec 2023.
Exercise 2. P ltd owns 75% of the share capital of S ltd for many years. The individual company statement of profit or loss for the year ending on 30 Jun 2023 are shown below.
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P Ltd
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S Ltd
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Revenue
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6,000
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3,000
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Cost of sales
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(4,000)
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(2,000)
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Gross Profit
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2,000
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1,000
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Operating expenses
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(1,000)
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(500)
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Profit from operations
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1,000
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500
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Tax
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(300)
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(100)
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Profit for the year
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700
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400
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During the year, P Ltd made sales totalling £1,000 to S ltd. P Ltd made a gross profit of 30% on these sales. All the goods were still in the inventory of S ltd at 30 June 2023.
Required
Prepare the consolidated statement of profit or loss for the year ended on 30 June 2023.
Exercise 3 P Ltd acquired 75% of the ordinary share capital of S Ltd on 1st April 2023. Both companies prepare accounts to 30th September each year. Their statements of profit or loss for the year ended on 30th September 2023 are as follows:
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P Ltd
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S Ltd
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£
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£
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Revenue
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317,500
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96,000
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Cost of sales
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(149,500)
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(31,200)
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|
Gross Profit
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168,000
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64,800
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Distribution costs
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(36,300)
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(4,800)
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Admin expenses
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(59,400)
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(20,400)
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Profit before tax
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72,300
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39,600
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Tax
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(21,000)
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(8,000)
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Profit for the year
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51,300
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31,600
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Required
Prepare the consolidated statement of profit or loss for the year ended on 30 Sept 2023.
Exercise 4
Feast Ltd acquired 60% of the ordinary share capital of GMT on 1st April 2022. The individual company statement of profit or loss for year ended on 31 March 2023 is as follows:
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Feast
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GMT
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£
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£
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Revenue
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359,800
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154,600
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Cost of sales
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(102,600)
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(55,550)
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Gross Profit
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257,200
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99,050
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Operating expenses
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(118,480)
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(19,300)
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Profit Before tax
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138,720
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79,750
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Taxation
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(40,000)
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(20,000)
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Profit for the year
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98,720
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59,750
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· On acquisition date the fair value of one of GMT’s machines exceeds its book value by £1,000. Machines are depreciated at 10% rate using straight-line method.
· On 1st March 2023, GMT sold goods to Feast for £15,000 on a 20% mark-up. One quarter of these goods were included in Feast’s inventory on 31st March 2023.
· In the year ended on 31 March 2023 the group decided to decrease the goodwill by £6,000 to allow for impairment. The group use the fair value method to account for non-controlling interest.
Note: in consolidation assume all income and expenses accrue evenly throughout the year.
Required
Prepare the consolidated statement of profit or loss for the year ended on 31 March 2023
Exercise 5
On 1st March 2023, Y Ltd acquired 85% of the ordinary share capital of Z ltd. Both companies prepare financial statements to 31st October each year. Transactions between the two companies during the year to 31st October 2023 were as follows:
a. On 31st July 2023, Y ltd sold goods costing £2,000 to Z Ltd for £3,500. All of these goods had been sold by Z Ltd by the end of the accounting year.
b. On 30th September 2023, Y ltd sold goods costing £4,000 to Z ltd for £7,000. None of these goods had been sold by Z ltd by the end of the accounting year.
There was an impairment loss relating to the goodwill arising from the acquisition of Z of £10,000 during the period from 1st March 2023 to 31st October 2023.
On acquisition date the fair value of one of Z’s selling vehicles exceeded its book value by £1,500. Vehicles are depreciated at 10% rate using straight-line method.
The individual company statements of profit or loss for year ended 31 October 2023 are as follows:
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Y Ltd
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Z Ltd
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£
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£
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Revenue
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150,000
|
84,000
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Cost of sales
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(60,000)
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(27,000)
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Gross Profit
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90,000
|
57,000
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Operating expenses
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(25,800)
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(18,600)
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Profit from operations
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64,200
|
38,400
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Taxation
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(13,000)
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(7,200)
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Profit for the year
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51,200
|
31,200
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Note: in consolidation assume all income and expenses accrue evenly throughout the year.
Required
Prepare the consolidated statement of profit or loss for the year ended on 31 Oct 2023