Question
My last hope, please help: Prepare the consolidated statement of changes in equity for P Ltd for the year ended 31 December 2021. P has
My last hope, please help: Prepare the consolidated statement of changes in equity for P Ltd for the year ended 31 December 2021.
P has two group companies, S and A. The income statements for P, S and A for the year ended 31 December 2021 are given as follows:
Income statements for the year ending 31 December 2021
P
S
A
$
$
$
Sales
40,500,000
22,950,000
16,200,000
Cost of sales
(15,930,000)
(7,965,000)
(4,320,000)
Gross profit
24,570,000
14,985,000
11,880,000
Investment income
1,255,000
-
-
Management fee income
3,915,000
-
-
Administrative expenses
(2,738,250)
(3,795,000)
(2,790,000)
Distribution costs
(1,260,000)
(1,173,000)
(517,500)
Interest income
675,000
-
-
Interest expense
(135,000)
(243,000)
-
Profit before tax
26,281,750
9,774,000
8,572,500
Tax
(1,350,000)
(945,000)
(1,269,000)
Profit after tax
24,931,750
8,829,000
7,303,500
P Ltd acquired 60% of S Ltd on 1 January 2015 for $3,024,000, gaining significant influence over S Ltd. On this date, the share capital of S Ltd was $900,000 and the retained earnings of S Ltd was $1,845,000.
P Ltd acquired 25% of A Ltd for $2,700,000 on 1 January 2017, gaining partial influence over A Ltd. A Ltds share capital and reserves were $1,015,000 on 1 January 2017. The share capital of A Ltd is 180,000 50c shares.
The interest income in P Ltd includes interest income on its 80% holding of bonds issued by S Ltd. P Ltd acquired these bonds without any goodwill arising, on 1 January 2017. The interest expense recorded by S Ltd represents the interest on the full bond issue. All companies have accounted for interest income and interest expense correctly.
During the year S Ltd sold goods costing $27,000 to P Ltd for $189,000. 15% of this inventory is included in P Ltds inventory at the year end.
During the year A Ltd sold goods costing $81,000 to P Ltd for $108,000. 50% of this inventory is still in P Ltds inventory at the year end.
Goodwill is capitalised. Impairment of 30% of the value of the goodwill of S Ltd was recognised in 2019 and impairment of 50% of the value of the goodwill in A Ltd is recognised in 2021.
At the year-end P Ltd charges both S Ltd and A Ltd a management fee of 10% of turnover. The companies have accounted for the management fee correctly. The management fee income in P Ltd represents management fee income from S Ltd and A Ltd. S Ltd and A Ltd have accounted for management fee expenses under administrative expenses.
The investment income in P Ltd comprises of dividend income from both group and non-group companies.
The retained earnings brought forward as at 1 January 2021 and dividend expense for the year ended 31 December 2021 for P Ltd, S Ltd and A Ltd were as follows:
P Ltd
S Ltd
A Ltd
$
$
$
Retained earnings
brought forward
21,720,000
2,700,000
1,800,000
Dividend expense
810,000
225,000
100,000
Required:
Prepare the consolidated statement of changes in equity for P Ltd for the year ended 31 December 2021.
My last hope, please help: Prepare the consolidated statement of changes in equity for P Ltd for the year ended 31 December 2021.
P has two group companies, S and A. The income statements for P, S and A for the year ended 31 December 2021 are given as follows:
Income statements for the year ending 31 December 2021
| P | S | A | ||
| $ | $ | $ | ||
Sales | 40,500,000 | 22,950,000 | 16,200,000 | ||
Cost of sales | (15,930,000) | (7,965,000) | (4,320,000) | ||
Gross profit | 24,570,000 | 14,985,000 | 11,880,000 | ||
Investment income | 1,255,000 | - | - | ||
Management fee income | 3,915,000 | - | - | ||
Administrative expenses | (2,738,250) | (3,795,000) | (2,790,000) | ||
Distribution costs | (1,260,000) | (1,173,000) | (517,500) | ||
Interest income | 675,000 | - | - | ||
Interest expense | (135,000) | (243,000) | - | ||
Profit before tax | 26,281,750 | 9,774,000 | 8,572,500 | ||
Tax | (1,350,000) | (945,000) | (1,269,000) | ||
Profit after tax | 24,931,750 | 8,829,000 | 7,303,500 |
P Ltd acquired 60% of S Ltd on 1 January 2015 for $3,024,000, gaining significant influence over S Ltd. On this date, the share capital of S Ltd was $900,000 and the retained earnings of S Ltd was $1,845,000.
P Ltd acquired 25% of A Ltd for $2,700,000 on 1 January 2017, gaining partial influence over A Ltd. A Ltds share capital and reserves were $1,015,000 on 1 January 2017. The share capital of A Ltd is 180,000 50c shares.
The interest income in P Ltd includes interest income on its 80% holding of bonds issued by S Ltd. P Ltd acquired these bonds without any goodwill arising, on 1 January 2017. The interest expense recorded by S Ltd represents the interest on the full bond issue. All companies have accounted for interest income and interest expense correctly.
During the year S Ltd sold goods costing $27,000 to P Ltd for $189,000. 15% of this inventory is included in P Ltds inventory at the year end.
During the year A Ltd sold goods costing $81,000 to P Ltd for $108,000. 50% of this inventory is still in P Ltds inventory at the year end.
Goodwill is capitalised. Impairment of 30% of the value of the goodwill of S Ltd was recognised in 2019 and impairment of 50% of the value of the goodwill in A Ltd is recognised in 2021.
At the year-end P Ltd charges both S Ltd and A Ltd a management fee of 10% of turnover. The companies have accounted for the management fee correctly. The management fee income in P Ltd represents management fee income from S Ltd and A Ltd. S Ltd and A Ltd have accounted for management fee expenses under administrative expenses.
The investment income in P Ltd comprises of dividend income from both group and non-group companies.
The retained earnings brought forward as at 1 January 2021 and dividend expense for the year ended 31 December 2021 for P Ltd, S Ltd and A Ltd were as follows:
| P Ltd | S Ltd | A Ltd |
| $ | $ | $ |
Retained earnings brought forward | 21,720,000 | 2,700,000 | 1,800,000 |
Dividend expense | 810,000 | 225,000 | 100,000 |
Required:
Prepare the consolidated statement of changes in equity for P Ltd for the year ended 31 December 2021.
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