Advanced financial accounting - Lecture 43. The main topics covered in this chapter include: income statement; profit after tax; less ordinary share capital; less impairment of owner’s equity; working minority interest;... Please refer to the lecture for details!
Advanced Financial Accounting Lec-43 Main Ahmad Farhan Question Income Statement For the year ended 2000 Rs Rs Sales 7,500 4,000 Less Cost of goods sold 4,500 2,900 Gross profit 3,000 1,100 Less Operating expenses 1,800 600 Operating profit 1,200 500 100 - 1,300 500 Less Income tax 520 200 Net profit after tax 780 300 Less Dividend paid 250 125 Net profit after dividend payment 530 175 Add Opening retained profit 1,000 450 Closing retained profit 1,530 625 Add Dividend income Net profit before tax Question The Parent Co acquired 80% equity of Subsidiary Co on 1st Jan 2003 for Rs 1,700 when S paid share capital was Rs 1,250 and it’s reserves were worth Rs 50 All goodwill has been impaired Required: Prepare the consolidated Income Statement for the year ended for 31-12-2008 Working (Profit After Tax) P Co = 300 x 80% = 240 S Co = 300 x 20% = 60 Working (Dividend) P Co = 125 x 80% = 100 S Co = 125 x 20% = 25 Working Holding % = 80% Minority % = 20% Working (Goodwill) Cost of investment 1,700 Less Ordinary share capital of S (1,300 x 80%) 1,040 Less Goodwill 660 Less Impairment of owner’s equity 660 Working Minority Interest Due to ordinary share-holder 300 x 20% = 60 Working (Opening Balance of Group Retained Profit) Post-acquisition part of opening retained of S Co to the extent of holding % Add Total opening balance of retained profit of P Co Opening balance of group retained profit Less Goodwill Amortization Closing balance 320 1,000 1,320 660 660 Solution Consolidated Income Statement For the year ended 31st Dec 2000 Sales Less Cost of goods sold Gross profit Less Operating expenses Operating profit Less Income tax Net profit after tax Less Minority interest Less Dividend paid Opening balance group retained profit Closing balance group retained profit 11,500 7,400 4,100 2,400 1,700 720 980 60 920 250 670 660 1,330 Question Income Statement For the year ended 2000 Rs Rs Sales 7,500 4,000 Less Cost of goods sold 4,500 2,900 Gross profit 3,000 1,100 Less Operating expenses 1,800 600 Operating profit 1,200 500 100 - 1,300 500 Less Income tax 520 200 Net profit after tax 780 300 Less Ordinary dividend paid 250 125 Net profit after dividend payment 530 175 Add Opening retained profit 1,000 450 Closing retained profit 1,530 625 Add Dividend income Net profit before tax Question The Parent Co acquired 80% equity of Subsidiary Co on 1st Jan 2003 for Rs 1,700 when S paid share capital was Rs 1,250 and it’s reserves were worth Rs 50 During the year S sold to P goods costing Rs 1,000 and selling price Rs 1,250 Total goodwill has been impaired so-far Required: Prepare the consolidated Income Statement for the year ended for 31-12-2008 Working Holding % = 80% Minority % = 20% Working (Goodwill) Cost of investment Ordinary share capital of S (1,250+50 x 80%) Goodwill Less Impairment of owner’s equity 1,700 1,040 660 660 Working (Opening Balance of Group Retained Profit) Opening balance of retained profit of P Co Post-acquisition part of opening retained of S Co to the extent of holding % (450-50)x80% Less Goodwill Amortization Closing balance 1,000 320 1,320 660 660 Working Minority Interest Profit after tax of Subsidiary Co x Minority interest 300 x 20% = 60 Working Consolidated Sales Sales of parent Co Add Sales of subsidiary Co Less Sales made by subsidiary Co Consolidated sales 7,500 4,000 1,250 10,250 Working Cost of Goods Sold Cost of goods sold of parent Co Add Cost of goods sold of subsidiary Co Less Increase in purchase of parent Co Add Unrealized profit 4,500 2,900 1,250 40 6,190 Solution Consolidated Income Statement For the year ended 31st Dec 2000 Sales Less Cost of goods sold Gross profit Less Operating expenses Operating profit Less Income tax Net profit after tax Less Minority interest Less Dividend paid Opening balance group retained profit Closing balance group retained profit 10,250 6,150 4,100 2,400 1,700 720 980 52 928 250 670 660 1,330 ... selling price Rs 1,250 Total goodwill has been impaired so-far Required: Prepare the consolidated Income Statement for the year ended for 3 1-1 2-2 008 Working Holding % = 80% Minority % = 20% Working... equity 660 Working Minority Interest Due to ordinary share-holder 300 x 20% = 60 Working (Opening Balance of Group Retained Profit) Post-acquisition part of opening retained of S Co to the extent... has been impaired Required: Prepare the consolidated Income Statement for the year ended for 3 1-1 2-2 008 Working (Profit After Tax) P Co = 300 x 80% = 240 S Co = 300 x 20% = 60 Working (Dividend)