CONSOLIDATED PROFIT OR LOSS STATEMENT PRACTICE QUESTION

CORFU (Adapted from Becker Professional Edition ACCA Diploma in International Financial Reporting)

Corfu holds 80% of the ordinary share capital of Zante (acquired on 1 February 2014) and 30% of the ordinary share capital of Paxos (acquired on 1 July 2013).

A director of Corfu has been appointed to the board of Paxos to take an active part in the management of that company.

Corfu had no other investment and none of the companies has any preferred capital.

The draft statements of profit or loss for the year ended 30 June 2014 are set out below:

Corfu Zante Paxos

$000 $000 $000

Revenue 12,614 6,160 8,640

Operating expenses (11,318) (5,524) (7,614)

Operating profit 1,296 636 1,026

Dividend received 171 -------- ----------

Profit before taxation 1,467 636 1,026

Income tax (621) (275) (432)

Profit after taxation 846 361 594

Dividend paid (500) (120) (250)

Included in the inventory of Zante at 30 June 2014 was $50,000 for goods purchased from Corfu in May 2014 which the latter company had invoiced at cost plus 25%. These were the only goods sold by Corfu to Zante but it did make sales of $180,000 to Paxos during the year. None of these goods remained in Paxoss inventory at the year end.

Required:

Prepare a consolidated profit or loss statement for Corfu for the year ended 30 June 2014.

(Ignore goodwill)