ABC Ltd acquired 70% of the shares in XYZ Ltd on 31st December 2015 for a cost of £4,000,000. The...
ABC Ltd acquired 70% of the shares in XYZ Ltd on 31st December 2015 for a cost of £4,000,000. The balance sheets of the two companies at 31 December 2016, and the profit and loss accounts for the year ended 31 December 2016 are as follows:
Additional information:
– A goodwill impairment review has been carried out and it has been determined that goodwill has been impaired by £300,000 as at 31st December 2016
– On 31st December 2016, ABC Ltd paid XYZ Ltd £200,000 in respect of intercompany liabilities, but XYZ has not yet recognised this in its accounts.
|
Prepare the consolidated profit and loss account for the Group for the year ended 31st December |
ABC Ltd XYZ Ltd
Balance Sheet at 31 December
2016 £'000 £'000
Fixed Assets 1,500 2,000
Investment in XYZ
Ltd
4,000
Current Assets
|
Due from group company |
1,100 |
450 |
|
Other current assets |
300 |
1,350 |
|
Current |
||
|
Due to Group Company |
-250 |
-1,100 |
|
Other current liabilities |
-400 |
-150 |
|
6,250 |
2,550 |
|
|
Ordinary shares |
2,000 |
1,275 |
|
P&L account pre 31.12.15 |
3,650 |
725 |
|
y/e 31.12.16 |
600 |
550 |
|
6,250 |
2,550 |
|
|
Profit & Loss account |
||
|
Year ended 31 December 2016 |
||
|
Sales external |
6600 |
2700 |
|
intergroup |
1700 |
1950 |
|
Cost of sales external |
-5100 |
-2000 |
|
intergroup |
-1950 |
-1700 |
|
Gross Profit |
1250 |
950 |
|
Admin Expenses |
-450 |
-275 |
|
Net profit before tax |
800 |
675 |
|
Taxation |
-200 |
-125 |
|
Net profit after |
600 |
550 |
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