Question
Lex Ltd acquired 75% of Equity Shares of Cate Ltd on 1st September 2018. Cmphrehensive Income as at 31st December 2020 is as follows; Lex
Lex Ltd acquired 75% of Equity Shares of Cate Ltd on 1st September 2018.
Cmphrehensive Income as at 31st December 2020 is as follows;
| Lex | Cate | |
| Revenue | 748000 | 130000 |
| Cost of sales | -320000 | -78000 |
| Gross profit | 428000 | 52000 |
| Distribution Cost | -85000 | -6000 |
| Admin Cost | -100000 | -10000 |
| Finance Cost | -21000 | -2000 |
| 222000 | 34000 | |
| Dividends Received | 18000 | |
| Profit Before Tax | 240000 | 34000 |
| Taxation | -61000 | -8000 |
| 179000 | 26000 |
Retained earnings of Cate Ltd on 1st September 2018 were 4000
Additional data as at 31 December 2020 are as follows
| Lex | Cate | |
| Balance 31 Dec 2019 | 65000 | 8000 |
| Profit for the year | 179000 | 26000 |
| Dividend | -130000 | -24000 |
| Balance 31 Dec 2020 | 114000 | 10000 |
Lex sold goods to Cate amounting to 12000 and the goods had been bought at 7000. One quarter of the goods were still held by Cate as by 31 December 2020
Goodwill on consolidation suffered an impairment loss of 15000
Required.
1.Consolidated statement of Income as at 31 December 2020
2.Extract from the consolidated statement of changes in equity showing changes in the groups retained earnings during the year 31 December 2020
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Fundamental financial accounting concepts
Authors: Thomas P. Edmonds, Frances M. Mcnair, Philip R. Olds, Edward
8th edition
978-007802536, 9780077648831, 0078025362, 77648838, 978-0078025365
