Question 1 AXL, a fast growing company based in Kampala, has been in operations since 2010. (a) The following statements of profit or loss for the year ended 30 June, 2020 are for AXL and its related companies: AXL BXL CXL Shs 'million' Shs 'million' USD '000' Revenue 6,500.00 3,000.00 600.00 Cost of sales 2,300.00 1.200.00 150.00 Gross profit 4,200.00 1,800.00 450.00 Other incomes 200.00 85.00 30.00 Distribution cost (800.00) (300.00) (80.00) Administration cost (600.00) (400.00) (50.00) Finance cost (150.00) (50.00) (20.00) Profit before tax 2,850.00 1, 135.00 330.00 Taxation (855.00) (340.50) (70.00) Profit after tax 1,995.00 794.50 260.00 Additional information: 1 On 1 October 2019, AXL acquired 75% of shares in BXL at a cost Shs 7.5 billion. The fair value of the identifiable net assets acquired was Shs 6 billion and the fair value of the non-controlling interest was Shs 1.5 billion. The fair value of the net assets was not materially different from their book values. 2 On 1 January 2020, BXL acquired 70% of shares in CXL at a cost USD 0.5 million. The fair value of the identifiable net assets acquired was USD 0.45 million and the fair value of the non-controlling interest was USD 0.18 million. The fair value of the net assets was not materially different from their book values. 3 On 1 April 2020, BXL sold machinery to AXL for Shs 93 million. The machinery had cost Shs 100 million on 1 July 2017. The group policy is to depreciate machinery at 20% on reducing balance basis. Profit or loss on disposal of assets is charged to other incomes account and depreciation expense is charged to administrative costs. 4 On 1 January 2020, AXL won a contract to supply, install and configure hardware and accounting software to one of the Government agencies in the country at a price Shs 6 billion. The