Reference no: EM132584078
Colombo PLC acquired 75% of the ordinary share capital of Kandy PLC several years ago. The statement of profit or loss of the two companies for the year ended 31 March 2020 is given below.
Rs.'000
Colombo PLC Kandy PLC
Sales Revenue 24,580 18,685
Cost of Sales (13,220) (10,425)
Gross Profit 11,360 8,260
Other Income 4,240 2,540
Administrative Expense (3,485) (2,860)
Sales Administrative Expenses (4,300) (3,680)
Finance Cost (1,615) (820)
Profit Before Tax 6,200 3,440
Tax Expense (1,850) (1,120)
Net Profit After Tax 4,350 2,320
Other information
1. For consolidation purpose Colombo PLC revalued the non-current assets of Kandy PLC and it was revealed that the fair value of all non-current assets was equal to its book value except for buildings which had a fair value of Rs.5,000,000 above its book value. This building has a remaining useful life of 25 years.
2. During the year ended 31 March 2020 Colombo PLC sold, at invoice price, Rs.4,000,000 worth of goods to Kandy PLC. Colombo PLC keeps 25% profit margin on its invoice price. Kandy PLC had half (50%) of these goods unsold as at 31 March 2020.
3. During the year Kandy PLC has sold, at invoice price, Rs.5,000,000 worth of goods to Colombo PLC. Kandy PLC keeps 40% profit margin on its invoice price. Colombo PLC had Rs.2,000,000 worth of these goods unsold as at the year end.
4. Colombo PLC provides management consultancy services to Kandy PLC at an annual fee of Rs.500,000.
5. On 1 April 2019 Colombo PLC sold a delivery vehicle to Kandy PLC for Rs.4,000,000 the carrying amount of this vehicle as at that date was Rs.3,000,000 with a remaining useful life of 5years
6. During the year Kandy PLC has paid Rs.800,000 dividend. Colombo PLC has recognized this dividend income under other income.
Required
Question 1: Consolidated Statement of Profit or Loss of Colombo PLC for the year ended 31 March 2020.