Plank Co has owned 35% of Arch Co since 1 June 20X7 and it acquired 85%...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Plank Co has owned 35% of Arch Co since 1 June 20X7 and it acquired 85% of Strip Co on 1 April 20X8. The statements of profit or loss and other comprehensive income for the year ended 31 December 20X8 are: Revenue Cost of sales Gross profit Distribution costs Administrative expenses Investment income Finance costs Profit before tax Income tax expense Profit for the year Other comprehensive income Gain on revaluation of land Plank Co Strip Co Arch Co $'000 $'000 $000 705,000 218,000 256,000 (320,000) (81.000) (83,500) 385,000 137,000 172,500 (58,000) (16.000) (18.500) (92,000) (28,000) (29,000) 46,000 2,000 (12,000) (14.000) (11.000) 269,000 81,000 114,000 (51,500) (15,000) (21,430) 217,500 66,000 92,570 2,800 3,000 Total comprehensive income for 220,300 69,000 92.570 the year The following information is relevant (i) A fair value exercise conducted on 1 April 20X8 concluded that the carrying amounts of Strip Co's net assets were equal to their fair values with the exception of an item of machinery which had a fair value of $8m in excess of its carrying amount. At 1 April 20X8. the machinery had a remaining life of three years. Depreciation is charged to cost of sales (ii) Since acquisition, Plank Co has sold goods to Strip Co totalling $39m. Strip Co had one quarter of these goods in inventory at 31 December 20X8. During the year, Plank Co also sold goods to Arch Co for $26m, all of which Arch Co held in inventory at 31 December 20X8. All of these goods had a mark-up on cost of 30% (iii) The investment income of Plank Co for the year ended 31 December 20X8 includes dividends from Strip Co and Arch Co (see note (iv)). It also includes $5m interest receivable on a loan made to Strip Co on 1 April 20X8 (iv) Strip Co paid a divided to shareholders of $18m on 31 December 20X8. Arch Co paid a dividend on 31 December 20X8 of $35m (v) In Plank Co's consolidated statement of financial position at 31 December 20X7, the carrying amount of Plank Co's investment in Arch Co was $145,000. This was calculated using equity accounting (vi) All other comprehensive income occurred after 1 April 20X8. Unless otherwise indicated, all other items in the above statements profit or loss and other comprehensive income are deemed to accrue evenly over the year (a) Prepare the consolidated statement of profit or loss and other comprehensive income of Plank Co for the year ended 31 December 20X8. Plank Co has owned 35% of Arch Co since 1 June 20X7 and it acquired 85% of Strip Co on 1 April 20X8. The statements of profit or loss and other comprehensive income for the year ended 31 December 20X8 are: Revenue Cost of sales Gross profit Distribution costs Administrative expenses Investment income Finance costs Profit before tax Income tax expense Profit for the year Other comprehensive income Gain on revaluation of land Plank Co Strip Co Arch Co $'000 $'000 $000 705,000 218,000 256,000 (320,000) (81.000) (83,500) 385,000 137,000 172,500 (58,000) (16.000) (18.500) (92,000) (28,000) (29,000) 46,000 2,000 (12,000) (14.000) (11.000) 269,000 81,000 114,000 (51,500) (15,000) (21,430) 217,500 66,000 92,570 2,800 3,000 Total comprehensive income for 220,300 69,000 92.570 the year The following information is relevant (i) A fair value exercise conducted on 1 April 20X8 concluded that the carrying amounts of Strip Co's net assets were equal to their fair values with the exception of an item of machinery which had a fair value of $8m in excess of its carrying amount. At 1 April 20X8. the machinery had a remaining life of three years. Depreciation is charged to cost of sales (ii) Since acquisition, Plank Co has sold goods to Strip Co totalling $39m. Strip Co had one quarter of these goods in inventory at 31 December 20X8. During the year, Plank Co also sold goods to Arch Co for $26m, all of which Arch Co held in inventory at 31 December 20X8. All of these goods had a mark-up on cost of 30% (iii) The investment income of Plank Co for the year ended 31 December 20X8 includes dividends from Strip Co and Arch Co (see note (iv)). It also includes $5m interest receivable on a loan made to Strip Co on 1 April 20X8 (iv) Strip Co paid a divided to shareholders of $18m on 31 December 20X8. Arch Co paid a dividend on 31 December 20X8 of $35m (v) In Plank Co's consolidated statement of financial position at 31 December 20X7, the carrying amount of Plank Co's investment in Arch Co was $145,000. This was calculated using equity accounting (vi) All other comprehensive income occurred after 1 April 20X8. Unless otherwise indicated, all other items in the above statements profit or loss and other comprehensive income are deemed to accrue evenly over the year (a) Prepare the consolidated statement of profit or loss and other comprehensive income of Plank Co for the year ended 31 December 20X8.
Expert Answer:
Answer rating: 100% (QA)
Step 1 Calculate income from Strip Co and Arch Co based on ownership percentages Income from Strip C... View the full answer
Related Book For
Financial Accounting and Reporting
ISBN: 978-0273744443
14th Edition
Authors: Barry Elliott, Jamie Elliott
Posted Date:
Students also viewed these accounting questions
-
Complete the following paragraph to explain the effect of multinational enterprises on a host nation's economy. Assume a large pharmaceutical company based in Germany decides to relocate some...
-
2. Derive the governing differential equation of the L-shape slender as shown below. The system can rotate about O and there is a mass welded to the extreme of the rod. When AO is horizontal the...
-
The new managing director of Eatmore Ltd (a company in the food industry) has asked you to analyse and give your views on the relative profitability and liquidity of its two wholly-owned...
-
Consider a corporate bond with a 10.5% coupon rate, paid semi-annually, $1000 par value and a current market price of $766.70. It matures in exactly 20 years. What is the yield to maturity (YTM) on...
-
If the acceleration is 2.00g at the feet, what is the acceleration at the heart? A. 0 B. 0.560g C. 1.40g D. 2.00g 3 20 Angular speed (rpm) 10 40 50 2. 3. 2. Acceleration (g)
-
Jane Smith, MD, has had a great year in her pediatrics practice, and she has cash that she wants to invest. Her financial adviser suggests she buy a seven-year, $1,500 par value bond with an annual...
-
Compute the present value of a \(\$ 10,000\), one-year note payable that specifies no interest, although \(10 \%\) would be a realistic rate. Is the present value less than, greater than, or equal to...
-
1. Describe the situation at Lehman Brothers from an ethics perspective. Whats your opinion of what happened here? 2. What was the culture at Lehman Brothers like? How did this culture contribute to...
-
fill in the blanks please Hennes & Mauritz have just issued a ten-year callable, 8% coupon bond with annual coupon payments. The bond can be called at par in one year or anytime therafter on a cou...
-
An investor, wants to know how two portfolios are performing in the market: 7% Y (3%) 12% Probability Market portfolio 0.40 0.20 15% 0.40 Beta factor 10% 18% Portfolio X 1.30 10% 8% 4% 0.75 1 The...
-
According to Blue Ocean Strategies, what is the four action framework of the organization Hubble Contacts ? Explain.
-
Identification and analysis of a Brand's current marketing campaign- Any multinational brand You will evaluate the importance or role of marketing in generating customer value. 1: The marketing mix...
-
A company has estimated the expected cash flows for two mutually exclusive projects as follows: Year Project 0 1 2 3 (RM'000) (RM'000) (RM'000) (RM'000) (RM'000) 1 (600) 400 300 300 100 2 (400) 200...
-
write the function i_join, which takes in only two lists and returns a list that contains lists with i-th elements of two sequences join together. The lengths of two sequences are the same. def...
-
1. Briefly explain two sources of market failure that result from markets themselves. 2. Explain one sense in which we live in an economic oligarchy rather than a market economy. 3. Briefly explain...
-
let g ( x ) = x 0 f ( t ) dt , At what value of x does g have an absolute maximum over the interval [ 0 , 1 2 ] ?
-
A ________ is established to transfer assets tax-free from one tax-sheltered account to another tax-sheltered account within 60 days of a distribution. SEP traditional IRA rollover IRA Keogh
-
Can partitioned join be used for r r.A s? Explain your answer
-
The following extract is from Conceptual Framework for Financial Accounting and Reporting: Elements of Financial Statements and Their Measurement, FASB 3, December 1976. The benefits of achieving...
-
Beta Ltd had the following changes during 20X1: 1 January 1,000,000 shares of 50c each 31 March 500,000 shares of 50c each issued at full market price of $5 per share 30 April Bonus issue made of 1...
-
(a) During 2006, Jack Matelot set up a company, JTM, to construct and refurbish marinas in various ports around Europe. The companys first accounting period ended on 31 October 2006 and during that...
-
4. Jean-Franois, a French wine exporter, sues Bob Joe, a Texas importer, claiming that Bob Joe owes him $2 million for wine. Jean-Franois takes the witness stand to describe how the contract was...
-
5. The Kyrgyz Republic is one of the new nations that broke away from the old Soviet Union. In September 1994, the government of Kyrgyzstan made two independent announcements: (1) it was abolishing...
-
6. The Instituto de Auxilios y Viviendas is a government agency of the Dominican Republic. Dr. Marion Fernandez, the general administrator of the Instituto and Secretary of the Republic, sought a...
Study smarter with the SolutionInn App