Constructing an income statement Banting Corporation (name disguised) is a major international pharmaceutical company. Listed below are items and amounts taken from the company’s consolidated accounts for the year to 31 December 20x2. All amounts are in millions of US dollars. (Note that not all items listed are drawn from the income statement.)

Financial income, net of financial expense 147 Share premium 1,026 Cost of goods sold 2,392 Licence fees and other operating income 347 Trade receivables 1,553 Research and development costs 1,588 Sales revenue 9,510 Investment income 20 Employee costs payable 430 Provision for deferred tax 543 Sales and distribution costs 2,886 Administration expenses 746 Corporate income tax 866 Work-in-progress 1,072 Required

(a) Prepare a multiple-step income statement for Banting Corporation for calendar year 20x2, showing separately gross profit, operating profit, profit before tax and net profit.

(b) Comment on Banting Corporation’s cost structure in 20x2. What is unusual about it?

Check figure:

(a) Net profit 1,546 AppenedixLO1