F1 6.04 Question 1 answer

Question

A Ltd had owned the whole share capital of B Ltd throughout their financial year. Their Statements of Profit or Loss for the year ended 30/11/2020 are shown below.

Prepare A Ltd’s consolidated statement of profit or loss for the year ended 30/11/2020.

Answer

Due to the simplicity of the scenario Sales, Cost of Sales, Administration Expenses, Finance Costs and Tax will be calculated by simply adding the figures of A Ltd and B Ltd together with no adjustments.

Gross profit, Profit from operations, Profit before tax and Profit for the year should be calculated using the consolidated income and expenses rather than by adding the figures of A Ltd and B Ltd together (even though this would give the same result in this instance).

The consolidated statement is shown below.

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