Entity P owns 100% of the equity capital of Entity S, and has owned the shares for several years. In the year just ended, the income statement of each entity was as follows.

Entity P Entity S

Revenue 500,000 250,000

Cost of sales -200,000 -80,000

Gross profit 300,000 170,000

Other income 25,000 6,000

Distribution costs -70,000 -60,000

Administrative expenses -90,000 -50,000

Other expenses -30,000 -18,000

Finance costs -15,000 -8,000

Profit before tax 120,000 40,000

Income tax expense -45,000 -16,000

Profit for the period 75,000 24,000

In this situation, the figures for the parent and subsidiary are added together to produce the consolidated income statement.