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FR – Nov 2021 – L2 – Q2 – Consolidated Financial Statements (IFRS 10)
Prepare a consolidated statement of profit or loss and other comprehensive income for Okechukwu Group for the year ended December 31, 2019.
Question
The statements of profit or loss and other comprehensive income of Okechukwu and its subsidiary, Ogenta Limited, for the year ended December 31, 2019, are presented below:
| Item | Okechukwu Plc (N’000) | Ogenta Ltd (N’000) |
|---|---|---|
| Revenue | 487,500 | 330,800 |
| Cost of sales | (304,500) | (258,300) |
| Gross profit | 183,000 | 72,500 |
| Investment income | 26,300 | 10,200 |
| Distribution cost | (24,050) | (13,370) |
| Administrative expenses | (40,625) | (21,120) |
| Finance costs | (10,500) | (9,860) |
| Profit before tax | 134,125 | 38,350 |
| Income tax expense | (33,800) | (13,000) |
| Profit for the year | 100,325 | 25,350 |
| Other comprehensive income | 23,880 | 10,440 |
| Total comprehensive income | 124,205 | 35,790 |
Additional information:
- Okechukwu Plc acquired 300 million of the ordinary shares issued by Ogenta Limited for N428 million.
- During the year ended December 31, 2019, Okechukwu Plc invoiced goods worth N80 million to Ogenta Limited. It is the policy of Okechukwu Plc to invoice goods at cost plus 33⅓%. Three-quarters of these goods are yet to be sold by Ogenta Limited at the year-end.
- Extracts from the books of Ogenta Limited at the date of acquisition reveal the following capital structure:
- Issued ordinary shares of 50 kobo each: N200 million
- General reserves: N80 million
- Retained earnings: N52.5 million
- The fair value of the non-controlling interests at the acquisition date amounted to N92.5 million.
- An impairment test on the goodwill of Ogenta Limited conducted on December 31, 2019, indicated that the goodwill should be written down by N3.2 million.
- On the acquisition date, the fair value of net assets of Ogenta Limited was equal to their carrying amount, except for land and building and office equipment, which had fair values of N5 million and N1.5 million, respectively, in excess of their carrying amounts. The group non-current assets are depreciated at the rate of 10% per annum on a straight-line basis and charged to administrative expenses.
- Ogenta Limited paid a total of N20 million as dividends to all its shareholders for the year ended December 31, 2019. Okechukwu Plc has accounted for the dividend received.
- The finance cost of Ogenta Limited includes N2 million paid to Okechukwu Plc as interest on a loan. Okechukwu Plc has recognized the amount as interest received.
Required:
Prepare the consolidated statement of profit or loss and other comprehensive income for Okechukwu Group for the year ended December 31, 2019.
Find Related Questions by Tags, levels, etc.
- Tags: Consolidation, Fair Value Adjustments, Goodwill Impairment, Intra-Group Sales, NCI, Subsidiary
- Level: Level 2
- Series: NOV 2021
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