Question

The following information relates to the Ashanti Group of Companies for the year to 30 April 2020.

Details	Ashanti Ltd	Bochem Ltd	Ceram Ltd
	$’000	$’000	$’000
Revenue	17,600,000	8,000,000	2,080,000
Cost of Sales	-10,080,000	-4,800,000	-1,120,000
Gross Profit	7,520,000	3,200,000	960,000
Administrative expenses	-1,680,000	-2,400,000	-320,000
Dividends received from Bochem	384,000	-	-
Dividends received from Ceram	96,000__	______	_______
Profit before taxation	6,320,000	800,000	640,000
Taxation	-1,040,000	-160,000	-320,000
Profit for the year	5,280,000	640,000	320,000

Additional Information:

Ashanti Ltd purchased 70% of the issued share capital of Bochem Ltd in 2000. At that time, the retained profits of Bochem amounted to $896,000.

Ashant Ltd purchased 60% of the issued share capital of Ceram Ltd in 2004. At that time, the retained profits of Ceram Ltd amounted to $320,000.

Sales from Ashanti to Bochem Ltd were $ 3 million during the post-acquisition period. Ashanti marks up all sales by 20%. At the reporting date this entire inventory remained in Bochem’s warehouse.

REQUIRED:

In so far as the information permits, prepare Fab Group of Companies’ Consolidated Income Statement for the year ended 30 April 2020 in accordance with IFRSs.   

Answer 1

Details	Ashanti Ltd	Bochem Ltd	Ceram Ltd	Consolidated
	$’000	$’000	$’000	$’000
Revenue	17600000	8000000	2080000	24680000	=17600000+8000000+2080000-3000000
Cost of Sales	-10080000	-4800000	-1120000	-13500000	=-10080000-4800000-1120000+2500000
Gross Profit	7520000	3200000	960000	11180000
Administrative expenses	-1680000	-2400000	-320000	-4400000
Dividends received from Bochem	384000	0	0	0	=384000-384000	this to be adjusted in reserves and surplus account in consolidated statement hence eleminated from here
Dividends received from Ceram	96000	0	0	0	=96000-96000
Profit before taxation	6320000	800000	640000	6780000
Taxation	-1040000	-160000	-320000	-1520000
Profit for the year	5280000	640000	320000	5260000
Working
Elemination of Inter group transaction
Consolidated sales revenue	3000000
To Consolidated cost of sales		2500000
To Consolidated inventory		500000
(elimination of intergroup transaction unrealised profit)