Illustrations of retained profits brought forward
H Ltd acquired 75% of the ordinary shares of S Ltd since S Ltd was incorporated. The Summarized income statement for the two companies for the year ending 31 December
|
20X2 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H Ltd
|
S Ltd
|
|
|
|
|
|
£
|
£
|
|
Sales revenue
|
|
|
75,000.00
|
38,000.00
|
|
Cost of sales
|
|
|
|
(30,000.00)
|
(20,000.00)
|
|
Gross profit
|
|
|
|
45,000.00
|
18,000.00
|
|
Operating expenses
|
|
|
(14,000.00)
|
(8,000.00)
|
|
Profit before tax
|
|
|
31,000.00
|
10,000.00
|
|
Taxation
|
|
|
|
(10,000.00)
|
(2,000.00)
|
|
Profit after tax
|
|
|
21,000.00
|
8,000.00
|
|
Retained profit b/f
|
|
|
87,000.00
|
17,000.00
|
|
Retained profit c/f
|
|
|
108,000.00
|
25,000.00
|
|
|
|
|
|
|
|
|
Required:
|
|
|
|
|
|
|
Prepare the consolidated income statement for the year ended 31 December 20X2.
|
|
H Ltd. And Its Subsidiary
Consolidated Income Statement for year ended 31/12/2002
|
|
|
£ ‘000’
|
£ ‘000’
|
|
Revenue(75+38)
|
|
113
|
|
Cost of sales(30+20)
|
|
(50)
|
|
Gross profit
|
|
63
|
|
Operating expenses(14+8)
|
|
22
|
|
Profit before tax
|
|
41
|
|
Income tax expense(10+2)
|
|
(12)
|
|
Profit after tax
|
|
29
|
|
Profit attributable to minority interest
|
|
(2)
|
|
Profit attributable to holding company
|
|
27
|
|
Retained profits b/f
|
|
99.75
|
|
Retained profit b/f
|
|
126.75
|