The following information is relevant:

1. Humphrey acquired 80% of Stanley many years ago, when the reserves of that company were $5,000.

2. Total intra-group sales in the year amounted to $100,000, Humphrey selling to Stanley.

3. At the year end the statement of financial position of Stanley included inventory purchased from Humphrey. Humphrey had recognised a profit of $2,000 on this inventory.

4. The investment income of Humphrey includes $16,000 from Stanley.

5. Goodwill of $10,000 has been fully written off

prior to the current period.

Required:

Prepare a consolidated statement of profit or loss for the year ended 30 September 20X6. (10 marks)

The following are the statements of profit or loss for the year ended 30 September 20X6 of Humphrey and its subsidary Stanley

Revenue

Cest of sales

Gross profit

Distribution costs

Administration costs

Operating profit

Investment incat

Interest

Proht before tax

Taxation

Profit for year

Dividends paid

5000 1,100

(000)

500

(240)

100

(65)

375

(50) (55)

55

5

54

20

(25)

370

(160)

210

(24)

30

Extract from the statement of changes in equity

(100)

Stanley 5000

400

(20)