Q 14 Gu (January 2013 QUESTION 1)

Unrealised profit 120*25/125=24,000/2=12,000

Revenue £’000
Gu plc 540,000
Best 346,000
Intercompany trading (120)
885,880
2 marks
Cost of Sales £’000
Gu plc 162,000
Best 172,000
Intercompany trading (120)
Unrealised profit 12
333,892
2 marks
Expenses £’000
Gu 188,000
Best 100,000
Additional depreciation 40 40
Impairment 5,000
293,040
2 marks
NCI - SOCI £’000
Best 40,000
Additional depreciation (40)
39,960
20% 7,992
2 marks
Gu plc
Consolidated Statement of Profit or Loss and Comprehensive Income for year ended
31st December 2011
£’000
Revenue 885,880
Cost of sales 333,892
Gross Profit 551,988
Expenses 293,040
Profit before interest and tax 258,948
Finance costs 68,000
190,948
Share of profit of associate (26000*30%*6/12) 3,900
Profit before tax 194,848
Income tax 92,000
Profit after tax 102,848

Profit attributable to the group 94,856

Profit attributable to NCI 7,992
102,848
2 marks
Goodwill Calculation

In controlling interest £’000 £’000

Consideration 300,000

Share Capital 100,000

Pre- acquisition Retained earnings 228,000
Revaluation 2,000
330,000
80% 264,000
Goodwill 36,000
4 marks

Investment in associate £’000

Cost 50,000
Share of post acq reserves 30%(13000) 3,900
Impairment (5,000)
48,900
3 marks

Consolidated Reserves
£’000
Gu plc 221,000
Best 80% post acquisition reserves 80%(40000) 32,000
Fred 30% (13000) 3,900
Impairment (5,000)
Additional depreciation 80%(40) (32)
Unrealised profit (12)
251,856
5 marks
Reconciliation £’000
Consolidated reserves 1.1.2011 157,000
Consolidated profit for the year 94,856
251,856
1 mark
Non controlling interest
£’000
Share capital 100,000
Reserves 268,000
Revaluation 2,000
Depreciation (40)
369,960
20% 73,992

2 marks
Total Question 1 25 marks