The income statements for the year ended 31 December 2020 and the statements of financial position as at 31 December 2020 for Garden Plc, Leaf Ltd and Flower Ltd are given as follows:

 

Statements of financial position as at 31 December 2020

		Garden Plc		Leaf Ltd		Flower Ltd
		£’000		£’000		£’000
Investments		30,100		-		-
Property, plant and equipment		5,100		24,300		6,800
Inventory		2,700		4,100		2,500
Other current assets		3,500		3,000		2,500
Total assets		41,400		31,400		11,800
Share capital		6,500		2,000		900
Retained Earnings		25,650		13,550		9,300
Revaluation reserve		-		1,350		-
Payables		9,250		14,500		1,600
Equity and reserves		41,400		31,400		11,800

                                                                                                              

 

Income statements for the year ended 31 December 2020

 

		Garden Plc		Leaf Ltd		Flower Ltd
		£’000		£’000		£’000
Turnover		26,100		18,900		10,200
Cost of sales		(5,400)		(8,100)		(2,200)
Gross profit		20,700		10,800		8,000
Operating expenses		(4,470)		(4,400)		(800)
Profit before tax		16,230		6,400		7,200
Tax		(3,480)		(1,800)		(900)
Profit after tax		12,750		4,600		6,300

Notes

 

Garden Plc acquired 75% of Leaf Ltd on 1 January 2015 for £15,200,000 when the share capital and reserves of Leaf Ltd were £8,100,000. At the date of acquisition, the fair value of Leaf Ltd’s non-current assets was £24,300,000. Leaf Ltd has accounted for this revaluation. No changes to the share capital and non-current assets of Leaf Ltd have taken place since acquisition.

Garden Plc acquired 30% of Flower Ltd on 1 January 2017 for £5,400,000 when the share capital and reserves of Flower Ltd were £1,900,000. No changes to the share capital of Flower Ltd have taken place since acquisition. 

Goodwill for all acquisitions is capitalised. Impairment of 15% is to be recognised against the goodwill of Flower Ltd in 2020.

In 2020 Leaf Ltd sells inventory which cost £450,000 to Garden Plc for £700,000. 20% of the inventory remains with Garden Plc at the end of 2020.              

At the year end, Garden Plc charges both Leaf Ltd and Flower Ltd a management fee of 10% of turnover. None of the companies have accounted for this management fee and the management fee has not been paid or received at the year end.

Leaf Plc revalues its non-current assets at the end of 2020 by £800,000 but has not yet accounted for this revaluation.

Required

Prepare the consolidated income statement for the year ended 31 December 2020 up to profit after tax and the consolidated statement of financial position as at 31 December 2020 for Garden Plc.

You do NOT need to calculate the non-controlling interest in the income statement or the retained profit brought forward in the income statement.

Total 20 marks