Keswick Co acquired 80% of the share capital of Derwent Co on 1 June 20X5. The summarised draft statements of profit or loss for Keswick Co and Derwent Co for the year ended 31 May 20X6 are shown below:
| KESWICK | DERWENT | |
| REVENUE | 12,600 | 2,400 |
| COST OF SALES | 6,300 | 1,440 |
| GROSS PROFIT | 6,300 | 960 |
| OPERATING EXPENSES | 4,410 | 576 |
| PROFIT BEFORE TAX | 1,890 | 384 |
| TAX | 378 | 77 |
| PROFIT | 1,512 | 307 |
During the year Keswick Co sold goods costing $1,000 to Derwent Co for $1,500. At 31 May 20X6, 30% of these goods remained in Derwent Co’s inventory.
Required:
(a) Prepare the Keswick group consolidated statement of profit or loss for the year ended 31 May 20X6.
Note: The statement should stop once the consolidated profit for the year has been determined. The amounts attributable to the non-controlling interest and equity owners of Keswick are not required. Show all workings as credit will be awarded to these as appropriate. (7 marks)
SUGGESTED SOLUTIONS
| KESWICK | DERWENT | ADJUSTMENT | CONSOLIDATED | |
| REVENUE | 12,600 | 2,400 | (1,500) | 13,500 |
| COST OF SALES | 6,300 | 1,440 | (1,500) | 6,240 |
| GROSS PROFIT | 6,300 | 960 | 7,260 | |
| UNREALIZED PROFIT | 150 | 150 | ||
| NET GROSS PROFIT | 6,150 | 960 | 7,110 | |
| OPERATING EXPENSES | 4,410 | 576 | 4,986 | |
| PROFIT BEFORE TAX | 1,740 | 384 | 2,124 | |
| TAX | 378 | 77 | 455 | |
| PROFIT | 1,362 | 307 | 1,669 |
To do the same topic again in ACCA F3 New Consolidated Account