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ACCA FR · Guided practice (Show me how)

Chapter 24: Group statement of profit and loss

Consolidated statement of profit or loss - mid-year acquisition, dividends and unrealised profit

Consider the following groups. Work in $000.

(a) Varden and Mallow - statements of profit or loss for the year ended 31 December 20X5 ($000):

On 1 July 20X5 Varden acquired 80% of the equity shares of Mallow; the group measures the NCI at fair value. After the acquisition Mallow declared a dividend of $10,000; Varden's dividend income includes its share. At the reporting date goodwill in Mallow was impaired by $20,000. Profits accrue evenly.

(b) Gary and Nick - statements of profit or loss for the year ended 31 December 20X5 ($000):

Gary acquired 80% of Nick on 1 January 20X5 (NCI at fair value: the full goodwill method). Goodwill was impaired by $1 million in the year, charged to operating expenses. During the year Nick sold goods for $10 million to Gary at a mark-up of 25% on cost; one quarter of them are still in Gary's inventory at the year end.

  1. (a) Varden: a mid-year acquisition

    Prepare the Varden group's statement of profit or loss for the year ended 31 December 20X5, including profit attributable to the non-controlling interest.

  2. (a) Varden: the owners of the parent

    Calculate the Varden group's profit attributable to owners of the parent for the year ended 31 December 20X5.

  3. (b) Gary: intra-group sales and unrealised profit

    Calculate the unrealised profit in Gary's inventory and prepare the Gary group's statement of profit or loss for the year ended 31 December 20X5, including the attribution of profit.

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