Alpha acquired 75% of Beta on 1 January 2010 when Beta’s retained earnings were £140 and the fair value of the subsidiary’s identifiable non-monetary assets was almost the same as the book value. Both companies have prepared their Statement of income as shown.

You are informed as follows:

(a) During the year Alpha sold goods to Beta, for £240, invoicing the goods at cost plus 20%.

(b) 25% of the goods sold by Alpha to Beta remained in the hands of Beta at the year-end. 

Required: 

Prepare the Consolidated Statement of income for the year ended 31 December 2012.

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Statements of income year ended 31 December 2012 Sales revenue Cost of sales Gross profit Distribution cost Administrative expenses Operating profit Interest Profit before taxation Taxation Profit after taxation Alpha £ 1,480 (1,060) 420 (142) (113) 165 (20) 145 (30) 115 Beta £ 740 (480) 260 (82) (68) 110 (12) 98 (18) 80