Highveldt plc, a public limited company is expanding the group business. On 1 January 2020, Highveldt plc acquired 70% interest in Samson Ltd and 30% interest in Alfred Ltd. Highveldt plc is represented on Alfred Ltd’s board of directors. Below are the statement of comprehensive income of Highveldt plc, Samson Ltd and Alfred Ltd for the year ended 31 December 2020

	Highveldt plc ($’000)	Samson Ltd ($’000)	Alfred Ltd ($’000)
Revenue	56,000	23,000	9,000
Cost of sales	(31,000)	(11,000)	(5,800)
Gross Profit	25,000	12,000	3,200
Operating expenses	(7,080)	(3,600)	(1,700)
Operating profit	17,920	8,400	1,500
Management services to Samson Ltd	300	-	-
Dividend from Samson Ltd	500	-	-
Finance Income	200	-	-
Finance costs	(150)	(120)	(10)
Profit before tax	18,770	8,280	1,490
Taxation	(4,780)	(2,080)	(390)
Profit after tax	13,990	6,200	1,100

Additional information:

1. Highveldt plc trades with Samson Ltd and during the year. Highveldt plc sold goods for $2,000,000 to Samson Ltd.
2. Highveldt plc sells to Samson Ltd at cost plus 25%. Half of these goods remain unsold in Samson Ltd.
3. Highveldt plc has recognized a dividend declared and paid by Samson Ltd of $500,000 during the year.
4. Included in the operating expenses of Samson Ltd is an amount of $300,000 management fees charged by Highveldt plc for the services provided.
5. Highveldt plc charges Samson Ltd 4% interest for the advances of $5,000,000 granted to Samson Ltd on 1 July 2020.
6. Investment in Alfred Ltd is impaired by $30,000.

REQUIRED:

1. Prepare the consolidated statement of comprehensive income for the year ended 31 December 2020. (Show all workings)

15. marks)

(b) After the above statement presented to the directors, the operation director is questioning as to how to derive at the Group Revenue, why the Revenue of Alfred Ltd has not been included as part of the Group Revenue. As a group accountant, give your explanation with justification to the director by referring to the relevant accounting standards.

(6 marks)

(c) Explain why intra-group transactions and balances are eliminated in consolidation.