Question 5 The summarised income statements and statements of retained profits of Boulder, Rock and Pebble for the year ended 31 March 2019 are provided below. Boulder Rock Pebble $'000 $'ooo $'000 Sales 6,400 2,600 1,500 Cost of sales (3.700) (1.450) (800) Gross profit 2,700 1,150 700 Distribution costs (1,100) (490) (150) Administrative expenses (700) (320) (200) Profit from operations 900 340 350 Dividends income from Rock 150 Dividends income from Pebble 20 Profit before tax 1,070 340 350 (400) (80) (70) Net profit for the period 670 260 280 Dividends (400) (200) (100) Retained profits at 1 April 2018 _500 300 200 Retained profits at 31 March 2019 770 360 380 Tax The following information is also available: 1. Boulder acquired 3,000,000 ordinary shares in Rock for $3,500,000 on 1 April 2004 when the retained earnings of Rock were $200,000 Boulder acquired 1,000,000 ordinary shares in Pebble for $1,500,000 on 1 June 2018 when the retained earnings of Pebble were $50,000. 2. Rock's and Pebble's total share capital consists of 4,000,000 and 5,000,000 ordinary shares each respectively. 3. At 31 March 2018 Boulder had valued the goodwill arising from the acquisition of Rock at $200,000. An impairment review of this goodwill at 31 March 2019 valued it at $130,000. 4. During the year ended 31 March 2019 Boulder sold goods costing $110,000 to Rock for $200,000. At 31 March 2019, 60% of these goods remained in Rock's inventory. 5. During the year ended 31 March 2019 Pebble sold goods costing $50,000 to Boulder for $75,000. At 31 March 2019, all of these goods remained in Boulder's inventory. Required: (a) Prepare the consolidated income statement for Boulder for the year ended 31 March 2019. (14 marks) (b) Prepare the statement of retained profits for Boulder for the year ended 31 March 2019. (6 marks) (Total 20 marks) Question 5 The summarised income statements and statements of retained profits of Boulder, Rock and Pebble for the year ended 31 March 2019 are provided below. Boulder Rock Pebble $'000 $'ooo $'000 Sales 6,400 2,600 1,500 Cost of sales (3.700) (1.450) (800) Gross profit 2,700 1,150 700 Distribution costs (1,100) (490) (150) Administrative expenses (700) (320) (200) Profit from operations 900 340 350 Dividends income from Rock 150 Dividends income from Pebble 20 Profit before tax 1,070 340 350 (400) (80) (70) Net profit for the period 670 260 280 Dividends (400) (200) (100) Retained profits at 1 April 2018 _500 300 200 Retained profits at 31 March 2019 770 360 380 Tax The following information is also available: 1. Boulder acquired 3,000,000 ordinary shares in Rock for $3,500,000 on 1 April 2004 when the retained earnings of Rock were $200,000 Boulder acquired 1,000,000 ordinary shares in Pebble for $1,500,000 on 1 June 2018 when the retained earnings of Pebble were $50,000. 2. Rock's and Pebble's total share capital consists of 4,000,000 and 5,000,000 ordinary shares each respectively. 3. At 31 March 2018 Boulder had valued the goodwill arising from the acquisition of Rock at $200,000. An impairment review of this goodwill at 31 March 2019 valued it at $130,000. 4. During the year ended 31 March 2019 Boulder sold goods costing $110,000 to Rock for $200,000. At 31 March 2019, 60% of these goods remained in Rock's inventory. 5. During the year ended 31 March 2019 Pebble sold goods costing $50,000 to Boulder for $75,000. At 31 March 2019, all of these goods remained in Boulder's inventory. Required: (a) Prepare the consolidated income statement for Boulder for the year ended 31 March 2019. (14 marks) (b) Prepare the statement of retained profits for Boulder for the year ended 31 March 2019. (6 marks) (Total 20 marks)
