Morn Ltd acquired 90% of the shares in Eve Ltd on 1 January 20X1 for £90,000 when Eve Ltd’s accumulated profits were £50,000. On 10 January 20X1 Morn Ltd received a dividend of £10,800 from Eve Ltd out of the profits for the year ended 31/12/20X0. The summarised income statements for the year ended 31/12/20X1 were as follows:

There were no inter-company transactions, other than the dividend. There was no goodwill.
Required:
Prepare a consolidated income statement for the year ended 31 December 20X1.

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Morn Eve Gross profit 360,000 180,000 Expenses 120,000 110,000 240,000 70,000 Dividends received from Eve Ltd 10,800 Profit before tax 250,800 70,000 Income tax expense 69,000 18,000 Profit for the period 181,800 52,000