Francis acquired 80% of Cole’s Co. equity shares for $300,000 on January 1, 2018. On 31 December 2018 Francis sold $100,000.00 worth of goods to Cole’s. These goods had cost Francis $80,000.00. On December 31, 2018, Cole still had 20% of worth of goods remaining in inventory (held at cost to Cole). The two companies draft income statements as at 31 December 2018 are shown below. Francis Cole’s $'000 $'000 Revenue 5,000.00 1,000.00 Cost of sales (2,900.00) (600.00) Gross profit 2,100.00 400.00 Administrative expense (1,000.00) (200.00) Distribution costs (700.00) (120.00) Profit before tax 400.00 80.00 Income tax expense (130.00) (25.00) Profit for the year 270.00 55.00 Required Prepare the consolidated income statement to incorporate Francis and Cole for the year ended 31 December 2018. Note: Show all workings
Francis acquired 80% of Cole’s Co. equity shares for $300,000 on January 1, 2018. On 31 December 2018 Francis sold $100,000.00 worth of goods to Cole’s. These goods had cost Francis $80,000.00. On December 31, 2018, Cole still had 20% of worth of goods remaining in inventory (held at cost to Cole). The two companies draft income statements as at 31 December 2018 are shown below.
|
|
Francis |
Cole’s |
|
|
$'000 |
$'000 |
|
Revenue |
5,000.00 |
1,000.00 |
|
Cost of sales |
(2,900.00) |
(600.00) |
|
Gross profit |
2,100.00 |
400.00 |
|
Administrative expense |
(1,000.00) |
(200.00) |
|
Distribution costs |
(700.00) |
(120.00) |
|
Profit before tax |
400.00 |
80.00 |
|
Income tax expense |
(130.00) |
(25.00) |
|
Profit for the year |
270.00 |
55.00 |
Required
Prepare the consolidated income statement to incorporate Francis and Cole for the year ended 31 December 2018.
Note: Show all workings
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