Sumo plc (“Sumo”), an Irish company that prepares its financial statements to 31 December each year, is involved in the manufacture of kit cars. On 1 January 2017, Sumo purchased 800,000 of the €1 ordinary shares in Cobra Limited (“Cobra”) for cash, a company that specialises in the manufacture of chassis. The fair value of Cobra’s net assets was the same as their book value except for plant and equipment which was understated by €400,000.

Cobra has not reflected this in its financial statements at 31 December 2017.

On 1 July 2017, Sumo purchased 300,000 of the €1 ordinary shares in Viper Limited

(“Viper”) for cash, a company that manufactures customised exhaust systems. On this date, the fair value of Viper’s net assets was the same as their book value.

STATEMENTS OF Profit oR Loss AND OTHER COMPREHENSIVE INCOME for the Year Ended 31 December 2017

Additional Information:
In October 2017, Cobra sold goods to Sumo with an invoice value of €400,000 on which Cobra made a mark-up of 25%. One half of these goods remained in Sumo's inventory at 31 December 2017. There was no other trading between Sumo, Cobra and Viper during 2017.
. None of the three companies has issued or cancelled shares since incorporation. Each of the companies depreciates plant and equipment on a straight-line basis at 25% per annum, with depreciation being reflected in operating expenses.
. With respect to the measurement of non-controlling interests at the date of acquisition of Cobra, the proportionate share method equates to the fair value method. The directors of Sumo are confident that any goodwill arising on the acquisition of Cobra and Viper had not been impaired at 31 December 2017.
. The shareholders of Sumo and Cobra approved the proposed dividends in December 2017. These were paid in 2018.
The activities and profits of the three companies accrue evenly throughout the year.
Requirement Prepare the consolidated statement of profit or loss and other comprehensive income for the year ended 31 December 2017 of Sumo and the consolidated statement of financial position as at that date.

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Sumo Cobra Viper 000 000 000 Revenue 15,000 2,500 1,000 Cost of sales (9,000) (1,250) (350) Gross profit 6,000 1,250 650 Operating expenses (2,200) (250) (150) Operating profit 3,800 1,000 500 Investment income 160 Profit before tax 3,960 1,000 500 Income tax expense (1,200) (300) (120) Profit after tax 2,760 700 380