You are the financial accountant of Work plc (“Work”), a company that prepares its financial statements to 31 December each year. Work has investments in two companies, Rest Limited (“Rest”) and Play Limited (“Play”). The draft statements of profit or loss and other comprehensive income of these three companies for the year ended 31 December 2017 are as follows:

Additional Information: 5 1. On 1 January 2012, Work purchased 80% of the ordinary share capital of Rest for z €7,500,000. The fair value of the net assets of Rest was the same as their book value on that date. The statement of financial position of Rest on 1 January 2012 e showed:

2. On 1 January 2017, Work purchased 100% of the ordinary share capital of Play for €10,500,000. The statement of financial position of Play on that date showed:

The fair value of the net assets of Play was the same as their book value on the acquisition date. Property, plant and equipment are depreciated over six years. During 2017, 50% of the inventory was sold outside the Group on normal trading terms, with the remaining inventory to be sold in 2018. ie 3. On 30 September 2017, Work disposed of the whole of its investment in Rest for €30,000,000. The taxation payable in connection with the disposal is €1,000,000.
The effect of the disposal has not yet been incorporated into the statement of profit or loss and other comprehensive income of Work. The activities of Rest are similar to Work and the directors of Work believe that the performance of the Group will not be materially affected following the disposal of Rest. (Note: the disposal of subsidiaries is dealt with in Chapter 32.)
4, During the year ended 31 December 2017, Play sold raw materials to Work at original cost plus a mark-up of 25%. At 31 December 2017, half of the raw materials sold to Work, at a cost of €120,000, remained in Work’s inventory.
5. Work charges Play a management fee of €50,000 per annum. The charge is included in the revenue of Work and the other operating expenses of Play.
6. There is no evidence that any goodwill arising on the acquisition of Rest and Play has ever been impaired.
Requirement Prepare the consolidated statement of profit or loss and other comprehensive income of the Work Group for the year ended 31 December 2017.

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Work Rest Play 000 000 000 Revenue 75,000 64,000 14,000 Cost of sales (37,500) (32,000) (7,000) Gross profit 37,500 32,000 7,000 Other operating expenses (20,000) (16,000) (3,000) Operating profit 17,500 16,000 4,000 Investment income 2,000 Interest payable (2,500) (1,000) (500) Profit before taxation 17,000 15,000 3,500 Taxation (4,250) (3,500) (875) Profit after taxation 12,750 11,500 2,625 Dividends paid (2,750) (2,000) Retained earnings for the year 10,000 11,500 625 Retained earnings at start of year 20,000 15,500 14,375 Retained earnings at end of year 30,000 27,000 15,000