P Ltd bought 80% of S Ltd's equity shares on 1 January 2016. On the date...

  

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P Ltd bought 80% of S Ltd's equity shares on 1 January 2016. On the date of the purchase of S Ltd's shares, among other things, S Ltd's statement of financial position contains the following: Retained profit Tangible non-current assets On the date of acquisition (of S Ltd's shares) by P Ltd, S Ltd's assets were not revalued to fair value. Cost Fair value It is part of S Ltd's accounting policy to depreciate non-current assets on a straight-line basis for 10 years. Revenue Cost of sales Gross profit The income statements of P Ltd and S Ltd for the year ended 31 December 2020 are as follows: Expenses Depreciation and amortization Operating profit Income tax Net profit Reserves (brought forward) Reserves (carried forward) $ 72,000 288,000 360,000 P Ltd $ 240,000 144,000 96,000 12,000 24,000 60,000 9,600 50,400 240,000 290,400 S Ltd $ 168,000 24,000 144,000 14,400 28,800 100,800 2,400 98,400 168,000 266,400 Note: P Ltd and S Ltd are considered to be in the same group for the purpose of financial reporting. Required: Compile a consolidated statement of profit or loss for P Ltd's group for the year ended 31 December 2020. Please be reminded that in the consolidated statement of profit or loss, you must clearly consider or include: the extra depreciation charge owing to any difference as regards the original costs of assets and their fair values; 'non-controlling interest' (NCI); and net profit that is only attributable to the group (i.e. after deducting NCI). Note: reserves brought forward of S Ltd is determined to be $53,760 ● ● b Explain what goodwill is in the context of HKFRS 3 and if the recognition of goodwill is generally considered a straightforward matter. P Ltd bought 80% of S Ltd's equity shares on 1 January 2016. On the date of the purchase of S Ltd's shares, among other things, S Ltd's statement of financial position contains the following: Retained profit Tangible non-current assets On the date of acquisition (of S Ltd's shares) by P Ltd, S Ltd's assets were not revalued to fair value. Cost Fair value It is part of S Ltd's accounting policy to depreciate non-current assets on a straight-line basis for 10 years. Revenue Cost of sales Gross profit The income statements of P Ltd and S Ltd for the year ended 31 December 2020 are as follows: Expenses Depreciation and amortization Operating profit Income tax Net profit Reserves (brought forward) Reserves (carried forward) $ 72,000 288,000 360,000 P Ltd $ 240,000 144,000 96,000 12,000 24,000 60,000 9,600 50,400 240,000 290,400 S Ltd $ 168,000 24,000 144,000 14,400 28,800 100,800 2,400 98,400 168,000 266,400 Note: P Ltd and S Ltd are considered to be in the same group for the purpose of financial reporting. Required: Compile a consolidated statement of profit or loss for P Ltd's group for the year ended 31 December 2020. Please be reminded that in the consolidated statement of profit or loss, you must clearly consider or include: the extra depreciation charge owing to any difference as regards the original costs of assets and their fair values; 'non-controlling interest' (NCI); and net profit that is only attributable to the group (i.e. after deducting NCI). Note: reserves brought forward of S Ltd is determined to be $53,760 ● ● b Explain what goodwill is in the context of HKFRS 3 and if the recognition of goodwill is generally considered a straightforward matter.

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1 Less Consolidated Statement of Profit and Loss Consolidated 374400 163200 144000 211200 1... View the full answer