maLASSma.com QUESTION 4 Planet plc, a public limited company is expanding the group business. On 1 January 2020, Planet ple acquired 75% interest in Space Ltd and 25% interest in Aero Ltd. Planet plc is represented on Aero Ltd's board of directors. Below are the statement of comprehensive income of Planet plc, Space Lid and Aero Ltd for the year ended 31 December 2020. Planet plc Space Ltd Aero Lad (S'000) (S'000) (S'000) Revenue 45,000 24,000 10.000 Cost of sales 126.000) 11.000 (6.800 Gross Profit 19,000 13.000 3.200 Operating expenses (6.060) (3.500 0.700) Operating profit 12.940 9.500 1.500 to 20 Management Services Space Ltd 600 Dividend from Space Ltd Finance Income 200 Finance costs 150) (120) Profit before tax 13.790 9.380 1.490 Taxation (4.800) 2 780) (450) Profit after tax 8.990 6.600 1040 Additional information Planet plc trades with Space Ltd and during the year. Planet plc sold goods for $3,000,000 to Space Ltd. ii) Planet plc sells to Space Ltd at cost plus 25%. Half of these goods remain unsold in Space Ltd. iii) iv) Planet plc has recognized a dividend declared and paid by Space Ltd of $600,000 during the year. Included in the operating expenses of Space Ltd is an amount of $200,000 management fees charged by Planet ple for the services provided. Planet plc charges Space Ltd 4% interest for the advances of $5,000,000 granted to Space Ltd on 1 July 2020 Investment in Aero Ltd is impaired by $50,000 v) vi) REQUIRED: (a) 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 and why the Revenue of Aero 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. (10 marks) (Total: 25 marks) (Grand Total: 100 marks) END OF QUESTIONS