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 | 8,400 | 9,600 |
| COST OF SALES | 4,200 | 5,760 |
| GROSS PROFIT | 4,200 | 3,840 |
| OPERATING EXPENSES | 2,940 | 2,304 |
| PROFIT BEFORE TAX | 1,260 | 1,536 |
| TAX | 252 | 307 |
| PROFIT | 1,008 | 1,229 |
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 | 8,400 | 9,600 | (1,500) | 16,500 |
| COST OF SALES | 4,200 | 5,760 | Derived | 8,610 |
| GROSS PROFIT | 4,200 | 3,840 | (150) | 7,890 |
| OPERATING EXPENSES | 2,940 | 2,304 | 5,244 | |
| PROFIT BEFORE TAX | 1,260 | 1,536 | 2,646 | |
| TAX | 252 | 307 | 559 | |
| PROFIT | 1,008 | 1,229 | 2,087 |
To do the same topic again in ACCA F3 New Consolidated Account