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Below are extracts from the income statement for the Kinspark group for the years ending 31 December 2020: SAR'000 Revenue 50,000 Cost of sales (24,000)

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Below are extracts from the income statement for the Kinspark group for the years ending 31 December 2020: SAR'000 Revenue 50,000 Cost of sales (24,000) Gross profit 26,000 Operating expenses (3,500) Profit from operations 22,500 Finance costs (900) Profit before tax 21,600 The following information is relevant: On 1 September 2020, Kinspark Co sold all of its shares in Sonwan Co, its only subsidiary, for SAR29.00m. At this date, Sonwan Co had net assets of SAR26.1m. Kinspark Co originally acquired 80% of Sonwan Co for SAR19.2m, when Sonwan Co had net assets of SAR19.8m. Kinspark Co uses the fair value method for valuing the non-controlling interest, which was measured at SAR4.9m at the date of acquisition. Goodwill in Sonwan Co has not been impaired since acquisition. In order to compare Kinspark Co's results for the year ended 2020, the results of Sonwan Co need to be eliminated from the above income statement for 2020. Although Sonwan Co was correctly accounted for in the financial statements for the year ended 31 December 2020, a gain on disposal of Sonwan Co of SAR9.44m is currently included in operating expenses. This reflects the gain which should have been shown in Kinspark Co's individual financial statements. Revenue In the year ended 31 December 2020, Sonwan Co had the following results: SAR'000 13,000 Cost of sales 6,700 Operating expenses 2,500 Finance costs 1,200 During the period from 1 January 2020 to 1 September 2020, Kinspark Co sold SAR1.5m of goods to Sonwan Co at a margin of 30%. Sonwan Co had sold all of these goods on to third parties by 1 September 2020. Required: a) Calculate the goodwill for Sonwan Co. b) Calculate the disposal value of the non-controlling interest in Sonwan Co. c) Calculate the gain on disposal which should have been shown in the income statement for the Kinspark group for the year ended 31 December 2020. d) Remove the results of Sonwan Co and the gain on disposal of the subsidiary to prepare a revised income statement for the year ended 31 December 2020 for Kinspark Co only e) Comment on the results calculated in d

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