Question
C Ltd owns all the issued shares of D Ltd and both companies have a year-end of 31st December. The companies’ statements of profit or loss for the year ended 31/12/2020 are shown below.
During the year D Ltd sold goods costing £105,000 to C Ltd for £142,000. In addition, C Ltd charged £50,000 to D Ltd for management fees. D Ltd recorded this cost as Administrative Expenses.
Prepare C Ltd’s consolidated statement of profit or loss for the year ended 31/12/2020.
Answer
The intragroup sales of £142,000 must be eliminated from the consolidated figures for Sales and Cost of Sales. In addition, the Management fees of £50,000 must be eliminated from the consolidated figures for Sales and Administrative Expenses.
The consolidated statement is shown below.
