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 | 33,600 | 9,600 |
| COST OF SALES | 16,800 | 5,760 |
| GROSS PROFIT | 16,800 | 3,840 |
| OPERATING EXPENSES | 11,760 | 2,304 |
| PROFIT BEFORE TAX | 5,040 | 1,536 |
| TAX | 1,008 | 307 |
| PROFIT | 4,032 | 1,229 |
During the year Keswick Co sold goods costing $2,500 to Derwent Co for $3,750. 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 | 33,600 | 9,600 | (3,750) | 39,450 |
| COST OF SALES | 16,800 | 5,760 | (3,750) | 18,810 |
| GROSS PROFIT | 16,800 | 3,840 | 20,640 | |
| UNREALIZED PROFIT | 375 | 375 | ||
| NET GROSS PROFIT | 16,425 | 3,840 | 20,265 | |
| OPERATING EXPENSES | 11,760 | 2,304 | 14,064 | |
| PROFIT BEFORE TAX | 4,665 | 1,536 | 6,201 | |
| TAX | 1,008 | 307 | 1,315 | |
| PROFIT | 3,657 | 1,229 | 4,886 |
To do the same topic again in ACCA F3 New Consolidated Account