Question 1

The following are the financial statements of Windsor Ltd and its subsidiary Ascot Ltd.

Statements of financial position as at 31.12.2022:

	Windsor Ltd	Ascot Ltd
ASSETS
Non-Current assets
Property, Plant and Equipment	350,000	150,000
Investment in Ascot Ltd	200,000
Current Assets
Inventories	70,000	70,000
Trade receivables	50,000	40,000
Bank	15,000	10,000
	135,000	120,000
Total Assets	685,000	270,000
EQUITY AND LIABILITIES
Capital and Reserves
Ordinary share capital	500,000	150,000
Retained earnings	150,000	110,000
	650,000	260,000
Current Liabilities
Trade payables	35,000	10,000
Total equity and liabilities	685,000	270,000

Income statements for the year ended 31.12.2022:

	Windsor Ltd	Ascot Ltd
Revenue	190,500	58,000
Cost of sales	(110,600)	(23,500)
Gross profit	79,900	34,500
Administrative expenses	(34,000)	(11,000)
Distribution costs	(13,000)	(4,000)
Finance costs	(1,500)	(1,000)
Profit before tax	31,400	18,000
Tax	(6,200)	(3,400)
Profit after tax	25,200	14,600

On 1^st January 2016 Windsor Ltd acquired 80% of shares in Ascot Ltd. At that time Ascot Ltd had retained earnings of 85,000. Goodwill has suffered an impairment of 20%.

The inventory held by Ascot Ltd includes goods purchased from Windsor Ltd for 5,000. Windsor Ltd has taken a profit of 25% on cost.

At 31^st December 2022 Windsor Ltd owes 8,000 to Ascot Ltd.

1) Prepare the consolidated statement of financial position as at 31 December 2022.

2) Prepare the consolidated income statement and the consolidated statement of changes in equity for the year ended 31 December 2022.

3) Explain the purposes and advantages of preparing consolidated financial statements for the parent companys shareholders.