QUESTION 1

On 1 April 20X1, Able Co owned 75% of the equity share capital of Bodied Co and 80% of the equity share capital of Dude Co. On 1 April 20X2, Ace Co purchased the remaining 25% of the equity shares of Bodied Co. In the two years ended 31 March 20X3, the following transactions occurred between the three companies:

1. On 30 June 20X1 Able Co manufactured a machine for use by Bodied Co. The cost of manufacture was $20,000. The machine was delivered to Bodied Co for an invoiced price of $25,000. Bodied Co paid the invoice on 31 August 20X1. Bodied Co depreciated the machine over its anticipated useful life of five years, charging a full year's depreciation in the year of purchase
2. On 30 September 20X2, Bodied Co sold some goods to Dude Co at an invoiced price of $15,000. Dude Co paid the invoice on 30 November 20X2. The goods had cost Bodied Co $12,000 to manufacture. By 31 March 20X3, Trey Co had sold all the goods outside the group.
3. For each of the two years ended 31 March 20X3, Able Co provided management services to Bodied Co and Dude Co. Ace Co did not charge for these services in the year ended 31 March 20X2 but in the year ended 31 March 20X3 decided to impose a charge of $10,000 per annum to Dude Co. The amount of $10,000 is due to be paid by Dude Co on 31 May 20X3.

Required :

Summarise the related party disclosures which will be required in respect of transactions (a) to (c) above for both of the years ended 31 March 20X2 and 31 March 20X3 in the financial statements of Able Co, Bodied Co and Dude Co.

Note. You may assume that Able Co presents consolidated financial statements for both of the years dealt with in the question.

(25 marks)