Venus co

This scenario relates to four requirements. Venus Co acquired 70% of the equity share capital of Luto Co, its only subsidiary, on 1 January 20X8. On reviewing the consolidated financial statements, the managing director of Venus Co was disappointed, commenting that he had expected to see higher gross profit for 20X8 due to the receipt of discounted purchases from Luto Co in the post-acquisition period. He has remarked that the acquisition of Luto Co has not had the positive impact he expected. Extracts from the draft financial statements of the Venus Group and Venus Co (single entity) for the years ended 30 June 20X7 and 20X8 are: Venus Group (consolidated) 30 June 20X8 $'000 Venus Co (single entity) 30 June 20X7 $'000 Statement of profit or loss: Revenue 39,000 32,000 Cost of sales (26,500) (21,000) Gross profit 12,500 11,000 ? Net profit for the year 9,800 8,900 Profit attributable to: Owners of Venus Co 9,200 Non-controlling interest 600 ? Statement of financial position: Equity Share capital 30,000 20,000 Other Components of Equity (Share premium) 35,000 5,000 Retained earnings 21,000 17,000 Non-controlling interest (NCI) 1,500 87,500 42,000 The acquisition of Luto Co has been accounted for correctly in the above financial statement extracts and the following notes are relevant: (1) Luto Co recognised revenue of $5m in the post-acquisition period which resulted in a profit of $2m. ? (2) ? ? Since the acquisition, Venus Co is able to acquire goods from Luto Co at a discount. This has resulted in a saving of $500,000 for Venus Co in the post-acquisition period. At 30 June 20X8 Venus Co had no inventory that had been purchased from Luto Co. ? (3) ? The consideration for the acquisition consisted of a share exchange and an additional $5m to be paid on 1 January 20X9. Venus Co has a cost of capital of 8% which is equivalent to a discount factor of 0.926. ? (4) ? ? The fair values of Luto Co’s assets at acquisition were equal to their carrying amounts, except for an item of plant. This plant had a remaining life of three years at the date of acquisition. Its fair value was $900,000 above its carrying amount. Venus Co’s assets are held at historical cost. ? (5) All revenue and expenses are deemed to accrue evenly throughout the year. Sir in this question one of the part asked for calculating net of profit venus co as if no acquisition took place. The first deducted the 2000 profit from $9800 and then also added back depreciation of fair value adjustment . But is don't understand why they did that. As if we see the nci is 600 so the total profit would have been 2000 for the six months( 600*100/30) so this would have already included the depreciation adjustment, then why the did it second time