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 | 29,400 | 21,600 |
| COST OF SALES | 14,700 | 12,960 |
| GROSS PROFIT | 14,700 | 8,640 |
| OPERATING EXPENSES | 10,290 | 5,184 |
| PROFIT BEFORE TAX | 4,410 | 3,456 |
| TAX | 882 | 691 |
| PROFIT | 3,528 | 2,765 |
During the year Keswick Co sold goods costing $2,000 to Derwent Co for $3,000. 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 | 29,400 | 21,600 | (3,000) | 48,000 |
| COST OF SALES | 14,700 | 12,960 | (3,000) | 24,660 |
| GROSS PROFIT | 14,700 | 8,640 | 23,340 | |
| UNREALIZED PROFIT | 300 | 300 | ||
| NET GROSS PROFIT | 14,400 | 8,640 | 23,040 | |
| OPERATING EXPENSES | 10,290 | 5,184 | 15,474 | |
| PROFIT BEFORE TAX | 4,110 | 3,456 | 7,566 | |
| TAX | 882 | 691 | 1,573 | |
| PROFIT | 3,228 | 2,765 | 5,993 |
To do the same topic again in ACCA F3 New Consolidated Account