Pepper bought 70% of Salt on 1 July 2016. The following are the statements of profit or loss of Pepper and Salt for the year ended 31 March 2017.
Pepper Salt
GHS’000 GHS’000
Revenue 31,200 10,400
Cost of sales (17,800) (5,600)
Gross profit 13,400 4,800
Operating expenses (8,500) (3,200)
Profit from operations 4,900 1,600
Investment income 2,000
Profit before tax 6,900 1,600
Tax (2,100) (500)
Profit for the year 4,800 1,100
The following information is available:
1. On 1 July 2016, an item of plant in the books of Salt had a fair value of GHS5,000,000 in excess of its carrying amount. At this time, the plant had a remaining life of 10 years. Depreciation is charged to cost of sales.
2. During the post-acquisition period Salt sold goods to Pepper for GHS4,400,000. Of this amount, GHS500,000 was included in the inventory of Pepper at the year-end. Salt earns a 35% margin on its sales.
3. Goodwill amounting to GHS800,000 arose on the acquisition of Salt, which had been measured using the fair value method. Goodwill is to be impaired by 10% at the year-end. Impairment losses should be charged to operating expenses.
4. Salt paid a dividend of GHS500,000 on 1 January 2017.
Required:
Prepare the consolidated statement of profit or loss for the year ended 31 March 2017.

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