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 | 4,200 | 12,000 |
| COST OF SALES | 2,100 | 7,200 |
| GROSS PROFIT | 2,100 | 4,800 |
| OPERATING EXPENSES | 1,470 | 2,880 |
| PROFIT BEFORE TAX | 630 | 1,920 |
| TAX | 126 | 384 |
| PROFIT | 504 | 1,536 |
During the year Keswick Co sold goods costing $500 to Derwent Co for $750. 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 | 4,200 | 12,000 | (750) | 15,450 |
| COST OF SALES | 2,100 | 7,200 | (750) | 8,550 |
| GROSS PROFIT | 2,100 | 4,800 | 6,900 | |
| UNREALIZED PROFIT | 75 | 75 | ||
| NET GROSS PROFIT | 2,025 | 4,800 | 6,825 | |
| OPERATING EXPENSES | 1,470 | 2,880 | 4,350 | |
| PROFIT BEFORE TAX | 555 | 1,920 | 2,475 | |
| TAX | 126 | 384 | 510 | |
| PROFIT | 429 | 1,536 | 1,965 |
To do the same topic again in ACCA F3 New Consolidated Account