In: Accounting
d) 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 Co Derwent Co
R000 R000
Revenue 8,400 3,200
Cost of sales (4,600) (1,700)
–––––– ––––––
Gross profit 3,800 1,500
Operating expenses (2,200) (960)
–––––– ––––––
Profit before tax 1,600 540
Tax (600) (140)
–––––– ––––––
Profit for the year 1,000 400
–––––– ––––––
During the year Keswick Co sold goods costing R1,000,000 to Derwent
Co for R1,500,000. 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.
(b) Which of the following formulas describes the amount to be
entered in the consolidated statement of profit or loss as ‘Profit
attributable to: Equity owners of Keswick Co’?
A Group profit after tax – non-controlling interest
B Group profit after tax + non-controlling interest
C Keswick Co’s profit after tax
D Group profit after tax
(c) What amount should be shown in the consolidated statement of
profit or loss for the non-controlling interest? (2 marks