Prepare consolidated statement of financial position (CSFP) as,Prepare consolidated statement of financial position (CSFP) as at 31 Dec 2020 and consolidated income statement (CIS) for the year ended 31 Dec 2020. Show clearly all supporting workings.

Income Statements for year ended 31 Dec 2020
Merry plc £ Pippin plc £ Sales 2,820,000 386,800 Cost of sales (1,856,000) (168,000) Gross profit 964,000 218,800 Operating expenses (524 000) (128,000) Profit from operations 440,000 90,800 Income from Investments 25,000 Interest (60 840) (6 300) Profit before tax 404,160 84,500 Tax (80,832) (26,500) Profit after tax 323,328 58,000
The following points are relevant to the preparation of the consolidated accounts:
(1)
Merry plc acquired 70% of the ordinary £1 shares of Pippin plc on 1 Jan 2020 for £450,000 in cash. The balance of the retained profit in Pippin plc was £441,412 at acquisition. The fair value of Pippin plc’s non-current assets (i.e. buildings) at the date of acquisition was £20,000 higher than their book value. Pippin plc does not account for this amount in its own accounts.

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(2) Merry plc sold goods to Pippin plc for £40,000 during 2020. The original cost of these goods was £20,000. Half of these goods were included in Pippin’s closing inventory on 31 Dec 2020.

(3) For the year ended 31 Dec 2020, goodwill impairment on the acquisition of Pippin plc was determined by the directors to be £12,000. (4) During 2020 Pippin paid total dividends of £21,000. (5) At 31 December 2020 Pippin Plc owed Merry plc £24,000. (6) Non-controlling interest (NCI) is determined using the partial goodwill method (Method 1). Required:

Part A:
Prepare consolidated statement of financial position (CSFP) as at 31 Dec 2020 and consolidated income statement (CIS) for the year ended 31 Dec 2020. Show clearly all supporting workings.
(80 marks)

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Part B: Discussion Question: What are inter company transactions? Why do we eliminate them? Provide at least three examples of inter company transactions.
(20 marks)
Total: 100 marks

Prepare consolidated statement of financial position (CSFP) as at 31 Dec 2020 and consolidated income statement (CIS) for the year ended 31 Dec 2020. Show clearly all supporting workings.

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