FR – May 2018 – L2 – Q1a – Consolidated Financial Statements (IFRS 10)

Prepare the consolidated profit or loss and other comprehensive income for Adanna Plc and its subsidiary Ebuka Ltd for the year ended December 31, 2017.

Question

Adanna Plc has a subsidiary, Ebuka Limited. The statement of profit or loss and other comprehensive income for the companies is as follows:

Statement of Profit or Loss and Other Comprehensive Income for the year ended December 31, 2017

	Adanna Plc (N’000)	Ebuka Limited (N’000)
Revenue	986,546	614,206
Cost of Sales	(593,204)	(365,903)
Gross Profit	393,342	248,303
Other Income	57,850	12,420
Distribution Costs	(69,496)	(40,562)
Administrative Expenses	(158,624)	(95,036)
Other Expenses	(32,108)	(15,814)
Finance Costs	(20,600)	(10,220)
Profit Before Tax	170,364	99,091
Income Tax Expense	(51,110)	(26,727)
Profit for the Year	119,254	72,364
Other Comprehensive Income:
Gain on Revaluation	68,166	29,202
Total Comprehensive Income	187,420	101,566

Additional Information:

Adanna Plc acquired 75% of the issued equity shares of Ebuka Limited three years ago. Goodwill on acquisition was N280 million. The recoverable amount of goodwill at the year-end was N268 million, marking the first time the recoverable amount had fallen below the initial recognition.
During the year, Ebuka Limited invoiced goods worth N300 million to Adanna Plc. A quarter of these goods were included in Adanna Plc’s inventory at the year-end. Ebuka Limited invoices goods at cost plus 25%.
Ebuka Limited’s distribution costs include depreciation of an asset subject to a fair value increase of N155 million on acquisition. The asset is being depreciated on a straight-line basis over ten years.
Adanna Plc’s other income includes an intercompany management charge of N10 million to Ebuka Limited, which was recognized as administrative expenses by Ebuka Limited.

Required: Prepare the Consolidated Statement of Profit or Loss and Other Comprehensive Income for Adanna Plc Group for the year ended December 31, 2017.

Answer

Adanna Plc Group Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended December 31, 2017