# 5. (10) The income statements for Zee Land and its wholly owned subsidiary Pakland for the year ended 31 July 20X6 are shown below: Zee Land Pakland $'000 Crowns '000 Revenue 3,000 650 Cost of sales (2,400) (550) Gross profit 600 100 Distribution costs (32) (41) Administrative expenses (168) (87) Finance costs (15) (10) Profit before tax 385 (38) Income tax Profit for the period (102) 283 10 (28) 1. The presentation currency of the group is the $, and Pakland's functional currency is the Crown. 2. Zee Land acquired 100% of the ordinary share capital of Pakland on 1 August 20X4 for 204,000 Crowns. Pakland's share capital at that date comprised 1,000 ordinary shares of 1 Crown each, and its reserves were 180,000 Crowns. In view of its subsidiary's losses, Zee Land's directors conducted an impairment review of the goodwill at 31 July 20X6. They concluded that the goodwill had lost 20% of its original value during the year (before taking exchange differences into account). The impairment should be reflected in the consolidated financial statements for the year ended 31 July 20X6. It is the group policy to value non- controlling interest at acquisition at the proportionate share of the identifiable net assets of the subsidiary. 3. On 1 June 20X6, Zee Land purchased an item of plant for 32,000 Florins. At the year end the payable amount had not yet been settled. No exchange gain or loss in respect of this item is reflected in Zee Land's income statement above. 4. Exchange rates are as follows: On 1 August 20X 4: On 31 July 20X 6: 1.7 Crowns $1 2.2 Crowns $1 Average rate for year ended 31 July 20X6: 2.4 Crowns _ $1 On 1 June 20X 6: On 31 July 20X 6: $1 1.5 Florins 1.6 Florins $1 5. During the year Pakland made sales of 50,000 Crowns to Zee Land. None of the items remained in inventory at the year end. Requirement Prepare the consolidated income statement for the Zee Land group for the year ended 31 July 20X6