The statements of profit or loss for Continent plc, Island Ltd and River Ltd for the year ended 31 December 2022 were as follows: 

Continent plc acquired 80% of Island Ltd for €27,500 on 1 January 2016, when Island Ltd’s retained earnings were €22,000 and share capital was €5,500. During the year, Island Ltd sold goods costing €2,750 to Continent plc for €3,850. At the year-end, 10% of these goods were still in Continent plc’s inventory. 

Continent plc acquired 40% of River Ltd for €100,000 on 1 January 2018, when River Ltd’s share capital and reserves totalled €41,250 (share capital consisted of 11,000 50c shares). 

During the year River Ltd sold goods costing €1,650 to Continent plc for €2,200. At the year-end, 50% of these goods were still in Continent plc’s inventory. 

Goodwill in Island Ltd had suffered impairment charges in previous years totalling €2,200 and goodwill in River Ltd impairment charges totalling €7,700. Impairment has continued during 2022, reducing the goodwill in Island by €550 and the goodwill in River by €3,850. Continent plc includes in its revenue management fees of €5,500 charged to Island Ltd and €2,750 charged to River Ltd. Both companies treat the charge as an administration cost. Non-controlling interests are measured using Method 1. 

Required:

Prepare Continent plc’s consolidated statement of profit or loss for the year ended 31 December 2022.

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Revenue Cost of sales Gross profit Administration costs Distribution costs Dividends receivable from Island and River Profit before tax Income tax Profit after tax Continent plc 825,000 (616,000) 209,000 (33,495) (11,000) 4,620 169,125 (55,000) 114,125 Island Ltd 220,000 (55,000) 165,000 (18,700) (14,300) (132,000) (33,000) 99,000 River Ltd 82,500 (8,250) 74,250 (3,850) (2,750) 67,650 (11,000) 56,650