- 10 Marks
FR – L2 – Q96 – Consolidated Financial Statements
Question
Shade Ltd holds 80% of the ordinary share capital of Find Ltd (acquired on 1 February 20X4) and 30% of the ordinary share capital of Reach Ltd (acquired on 1 July 20X3).
Shade Ltd had no other investments.
The draft statements of profit or loss for the year ended 30 June 20X4, are set out below.
| Shade Ltd GH¢000 | Find Ltd GH¢000 | Reach Ltd GH¢000 | |
|---|---|---|---|
| Revenue | 12,614 | 6,160 | 8,640 |
| Operating expenses | (11,318) | (5,524) | (7,614) |
| Dividends receivable | 150 | – | – |
| 1,446 | 636 | 1,026 | |
| Taxation | (621) | (275) | (432) |
| Profit after taxation | 825 | 361 | 594 |
Included in the inventory of Find Ltd at 30 June 20X4 was GH¢50,000 for goods purchased from Shade Ltd in May 20X4 which the latter company had invoiced at cost plus 25%. These were the only goods sold by Shade Ltd to Find Ltd but it did make sales of GH¢180,000 to Reach Ltd during the year. None of these goods remained in Reach Ltd’s inventory at the year end.
Required
Prepare a consolidated statement of profit or loss for Shade Ltd for the year ended 30 June 20X4.
Answer
HIDE LTD
consolidated statement of profit or loss for the year-ended 30 June 20X4
GH¢000
Revenue 15,131
Cost of sales and expenses (13,580)
Operating profit before tax 1,551
Tax (736)
Profit after tax 815
Share of profit of associate (30% of 594) 178
Non-controlling interest (W3) (30)
Profit for the year attributable to members of Hide 963
Workings
(1) Group structure
(2) Consolidation schedule (all amounts in GH¢000)
| Shade | Find (5/12) | Reach | Adj | Consol | |
|---|---|---|---|---|---|
| 5/12 | 30% | ||||
| Sales revenue | 12,614 | 2,567 | 15,131 | ||
| C of S – per Q | (11,318) | (2,302) | (13,580) | ||
| 1,296 | 265 | 1,551 | |||
| Tax | (621) | (115) | (736) | ||
| PAT | 675 | 150 | 815 | ||
| Share of associate’s profit | 178 | 178 | |||
| NCI (20% x 150) | (30) | (30) | |||
| Group profit | 963 |
(3) Non-controlling interest
Find Ltd acquired on 1 February 20X4, so included for 5 months (5/12 of year).
Profit after tax of Find Ltd for 5/12 of year: 5/12 x 361 = 150
NCI share: 20% x 150 = 30
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