Question

u nha Question 1 The summarised Statement of Profit and Loss of Callanan Ple, Maher Ltd and O' Dwyer Lid for the year nueu 2016 are as follows: Statement of Profit and Loss for year ended 31 December 2016 Callanan Plc €'000 4,725 (1,890) 2,835 Maher Ltd €'000 8,770 (3,510) 5,260 O' Dwyer Ltd E'000 3,150 (1,260) 1,890 26 (850) 4,410 (945) 945 Sales Costs of Sales Gross Profit Other Operating Income Other Operating Expenses Operating Profit Dividend Receivable Interest Payable and similar charges Profit before taxation Taxation Profit after tax Retained Profit at 31 December 2015 (1,415) 1,446 36 (345) 1,137 (378) 759 2,365 (590) 3,820 (1,289) 2,531 2,135 (230) 715 (255) 460 540 Retained Profit at 31 December 2016 3,124 4,666 1,000 The following information is also available: 1. Callanan Plc acquired an 80% of the ordinary shareholding and 45% of the 400,000 9% preference shares in Maher Ltd on 1 January 2016 and 35% of O'Dwyer Ltd on 1"July 2014 when their revenue reserves were € 320,000 debit. 2. Callanan Plc charges Maher Ltd a management fee of € 10,000 per annum which it records as other operating income and Maher Ltd charge this fee to other operating expenses. 3. On 1st July 2016 Maher Ltd sold equipment and with a book value of €750,000 (cost €1,125,000 to Callanan P for €1,050,000. The remaining useful economic life of the equipment on 1" July 2012 was 5 years. 4. The board of directors of Callanan Plc and Maher Ltd have approved an ordinary dividend of € 75,000 and € 45,00 respectively for the current year. Both companies have not yet accounted for these proposed dividends payab however Callanan Plc has accounted for its dividend receivable from Maher Ltd. Requirement: Prepare the consolidated statement of profit and loss of the Callanan Group for the year ended 31 December 2016.

Answer 1

CALLANAN GROUP
Consolidated Statement of Profit and Loss
for the year ended 31 December 2018
Description	Amount	Amount
	('000)	('000)
Sales
Callanan Plc.	4,725
Maher Ltd.	8,770
O'Dwyer Ltd.	3,150	16,645
Cost of Sales
Callanan Plc.	(1,890)
Maher Ltd.	(3,510)
O'Dwyer Ltd.	(1,260)	(6,660)
Gross Profit		9,985
Other Operating Income
Callanan Plc.	26
Maher Ltd.
O'Dwyer Ltd.
Intercompany Eliminations
Management Fees Income	(10)	16
Other Operating Expenses
Callanan Plc.	(1,415)
Maher Ltd.	(850)
O'Dwyer Ltd.	(945)
Intercompany Eliminations
Management Fees Expenses	10
Preference Share Dividend	36
Profit on sale of Equipment	(300)
Depreciation on Equipment	375	(3,089)
Operating Profits		6,912
Dividend Receivable
Callanan Plc.	36
Maher Ltd.
O'Dwyer Ltd.
Intercompany Eliminations
Dividend Receivable	(36)	-
Interest Payable and similar charges
Callanan Plc.	(345)
Maher Ltd.	(590)
O'Dwyer Ltd.	(230)	(1,165)
Profit before taxation		5,747
Taxation
Callanan Plc.	(378)
Maher Ltd.	(1,289)
O'Dwyer Ltd.	(255)	(1,922)
Profit after tax		3,825
Elimination of profit share of Non-Controlling Interest
Maher Ltd.	(506)
O'Dwyer Ltd.	(299)	(805)
		3,020
Dividends Payable
Callanan Plc.	(75)
Maher Ltd.	(36)
O'Dwyer Ltd.
Intercompany Eliminations
Dividend Payable to Callanan Plc.	36	(75)
Profit transferred to Retained Profits		5,965
Retained Profit at 31 December 2015
Callanan Plc.	2,365
Maher Ltd.	2,135
O'Dwyer Ltd.	540
Elimination of share of Non-Controlling Interest
Maher Ltd.	(427)
O'Dwyer Ltd.	(351)	4,262
Retained Profit at 31 December 2016		10,227
Note
(i) It has been assumed that Other Operating Costs schedule of Maher Ltd.
includes the following items
Profit on sale of equipment		300,000
Preference Share Dividend		45,000
(ii) The useful life of the equipment as per the original terms was 5 years
as on 1 July 2012.Hence, the useful life remaining as on 1 July 2016 is
one year.This means that the book value of the asset ( 750,000) is to be fully
depreciated on 1 July 2017. Hence the depreciation for 6 months (i.e.
from 1 July 2016 to 31 Dec 2016 would be charged to the consolidated
Profit and Loss account. (750,000 *6/12 = 375,000)
(iii) It has been assumed that Callanan Plc. Has not charged any
depreciation on the equipment purchased due to the absence of the
requisite information about the useful life assumption by it.
(iv) Share of Non-controlling Interest
	Maher Ltd	O'Dwyer Ltd.
Profit after Tax	2,531	460
Non-Controlling Interest Holdings	20%	65%
Share of Profits of Non-controlling Interest	506.20	299.00
Retained Profit at 31 December 2015	2,135.00	540.00
Non-Controlling Interest Holdings	20%	65%
Share of Retained Profits of Non-controlling Interest	427.00	351.00
Since,the profits attributed to non-controlling interest have been removed from
the consolidated profit and loss statement,only the dividend payable by Maher
Ltd. which are attributable to Callanan Plc.( 80% of 45,000) would be shown in
the statement.