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 | 4,800 |
| COST OF SALES | 2,100 | 2,880 |
| GROSS PROFIT | 2,100 | 1,920 |
| OPERATING EXPENSES | 1,470 | 1,152 |
| PROFIT BEFORE TAX | 630 | 768 |
| TAX | 126 | 154 |
| PROFIT | 504 | 614 |
During the year Keswick Co sold goods costing $1,500 to Derwent Co for $2,250. 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 | 4,800 | (2,250) | 6,750 |
| COST OF SALES | 2,100 | 2,880 | (2,250) | 2,730 |
| GROSS PROFIT | 2,100 | 1,920 | 4,020 | |
| UNREALIZED PROFIT | 225 | 225 | ||
| NET GROSS PROFIT | 1,875 | 1,920 | 3,795 | |
| OPERATING EXPENSES | 1,470 | 1,152 | 2,622 | |
| PROFIT BEFORE TAX | 405 | 768 | 1,173 | |
| TAX | 126 | 154 | 280 | |
| PROFIT | 279 | 614 | 893 |
To do the same topic again in ACCA F3 New Consolidated Account