Answered: 3,300 1,500 Cost of sales (1,890)…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The following information relates to Dork Ltd and its subsidiary Sark Ltd. for the year ended 31 March 2018.

	Dork Ltd.	Sark Ltd.
$'000	$000
Sales revenue	3,300	1,500
Cost of sales	(1,890)	(900)
Gross profit	1,410	600
Administrative expenses	(315)	(450)
Dividend from Sark	72	–
Profit before tax	1167	150
Income tax expense	(195)	(30)
Profit for the year	972	120
Dividends paid		72
Profit retained	972	48

i. The issued share capital of the group was as follows. Dork Ltd.: 15,000,000 ordinary shares of $1 each. Sark Ltd.: 3,000,000 ordinary shares of $1 each.

ii. Dork Ltd. purchased 80% of the issued share capital of Sark Ltd. in 2010. At that time, the retained earnings of Sark was at $168,000.

Required:

A. Insofar as the information permits, prepare the Dork group consolidated income statement for the year to 31 March 2018, showing profit attributable to both owners of the parent and non-controlling interests.

B. An extract of the Statement of Financial Position showing retained earnings and non- controlling interest. Show all accompanying workings

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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