Liverpool plc is a company that manufactures a number of different types of electrical goods and has
Question:
Liverpool plc is a company that manufactures a number of different types of electrical goods and has a year-end of 31 March. Liverpool plc acquired 75% of the ordinary share capital of Manchester Limited on 1 April 2013 for £840,000. On the date of acquisition, the balance on the retained earnings reserve of Manchester Limited was £300,000 and the ordinary share capital of Manchester Limited was £760,000. The goodwill arising on the acquisition of Manchester Limited has been fully impaired by 31 March 2019.
Liverpool plc formed a joint venture in 2010 with another company. The joint venture is called Sheffield Limited, and Liverpool plc has a 50:50 share with the other company in the joint venture. The ordinary share capital of Sheffield Limited consisted of 90,000 ordinary shares of £1 each.
The draft income statements of Liverpool plc, Manchester Limited, and Sheffield Limited for the year ended 31 March 2020 were as follows:
The following additional information is available.
1. On 1 May 2019, Liverpool plc sold goods to Manchester Limited for £400,000, which had an original cost to Liverpool plc of £300,000. Manchester Limited sold all of these goods to third parties in August 2019 for £480,000.
2. On 31 January 2020, Manchester Limited sold goods to Liverpool plc for £200,000, which had an original cost to Manchester Limited of £180,000. On 31 March 2020, none of these goods had been sold by Liverpool plc to third parties.
3. The other operating income of Liverpool plc includes £100,000 charged to Manchester Limited for carrying out accounting services on their behalf. This charge is included in Manchester Limited’s administrative expenses. The remaining other operating income of Liverpool plc arises from companies outside of the Liverpool Group plc.
REQUIRED
- Prepare the Consolidated Statement of Comprehensive Income of the Liverpool Group plc for the year ended 31 March 2020.
2. Calculate the balance on the consolidated retained earnings reserve of the Liverpool Group plc at 31 March 2020.
Elementary Statistics
ISBN: 978-0538733502
11th edition
Authors: Robert R. Johnson, Patricia J. Kuby