ACCT 320

FINAL EXAM PART 3

SAMIA ALI
START TIME 4:15pm END TIME 4:55 pm (40 minutes)
TOTAL MARKS 15

The statements of profit or loss and other comprehensive income for Prime Co. and
Sub Co. for the year ended 31st December 2020 are as follows:
$ in thousands Prime Sub
Revenue 810,000 432,000
Cost of Sales 468,000 198,000
Gross Profit 342,000 234,000
Distribution Costs 42,480 21,600
Administrative Expenses 48,600 41,400
Finance costs 2,700 2,160
Profit before tax 248,220 168,840
Income tax expense 86,400 50,040
Profit for the year 161,820 118,800
Other Comprehensive Income
Gain on revaluation of land 4,500 1,800
Loss on fair value of investment 1,260 720
Total Other Comprehensive Income 165,060 119,880

Additional information
i) Prime purchased 85% equity shares of Sub on June 30th 2020.
ii) On 1st July 2020 (after acquisition) Prime sold a building with a carrying
amount of $4 million to Sub for $5 million. At the date of sale the building
had a remaining life of 2.5 years. Prime included the profit on the transfer
of the building as a reduction in its depreciation costs which have been
charged to cost sales
iii) Post acquisition Sub’s land has increased in value by $1.8 million over its
value at the date of acquisition. The revaluation has been recorded by Sub
on its books.
iv) After the acquisition Sub sold goods to Prime for $40 million. These goods
had a cost of $30 million to Sub. At year end $12 million of the goods
remained in Prime’s inventory.
v) All sales and expenses are accrued evenly over the financial year.
Required prepare the consolidated statement of profit or loss and other
comprehensive income of Prime Co. for the year ended 31st December 2020.
NOTE: YOU WILL GET PARTIAL OR NO CREDIT FOR

• Incomplete working
• Working which is messy or difficult to find or follow