F1 6.06 Question 3 answer

Question

G Ltd is the parent company of H Ltd and owns 5,000 ordinary shares in H Ltd. It also owns £200,000 15% of debentures in H Ltd. During the year ended 30 June 2020, H Ltd paid dividends of £8 per ordinary share.

The statements of profit or loss for both companies are shown below.

Prepare G Ltd’s consolidated statement of profit or loss for the year ended 30/06/2020.

Answer

The calculation of the consolidated dividend income must exclude the dividends received by G Ltd from H Ltd. In addition, the consolidated finance income and finance costs must exclude the interest paid by H Ltd to G Ltd.

The consolidated statement is shown below.

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