Silver plc acquired 75% of the issued share capital of Gold Ltd on 1 January 2019. Summarised
Question:
Silver plc acquired 75% of the issued share capital of Gold Ltd on 1 January 2019. Summarised statements of profit or loss for the year ended 31 December 2019 are shown below:
Silver plc | Gold Ltd | |
£000 | £000 | |
Continuing operations | ||
Revenue | 89,000 | 19,900 |
Cost of sales | (56,400) | (8,754) |
Gross profit | 32,600 | 11,146 |
Other income – dividend from Brown Ltd | 4,950 | – |
Operating expenses | (14,342) | (6,735) |
Profit from operations | 23,208 | 4,411 |
Additional information
During the year Silver sold goods which had a cost of £350, 000 to Gold Ltd for £795, 000. None of these goods remain in inventory at the end of the year.
Goodwill of £350, 000 arose at the acquisition. The directors of Silver plc concluded that the goodwill had been impaired by 20% during the year.
(a) Draft the consolidated statement of profit or loss for Silver plc and its subsidiary up to and including the profit from operations line for the year ended 31 December 2019.
Financial Accounting and Reporting
ISBN: 978-0273744443
14th Edition
Authors: Barry Elliott, Jamie Elliott