Question: The statements of financial position of Mars
The statements of financial position of Mars plc and Jupiter plc at 31 December 20X2 are as follows:
Statements of comprehensive income for the year ended 31 December 20x2
Mars acquired 80% of the shares in Jupiter on 1 January 20X0 when Jupiter’s retained earnings were £80,000 and the balance on Jupiter’s general reserve was £18,000. Non-controlling interests are measured using Method 1. During the year Mars sold Jupiter goods for £18,000 which represented cost plus 50%. Half of these goods were still in stock at the end of the year.
During the year Mars and Jupiter paid dividends of £180,000 and £11,250 respectively. The opening balances of retained earnings for the two companies were £156,000 and £114,750 respectively.
Required:
Prepare a consolidated statement of income for the year ended 31/12/20X2, a statement of financial position as at that date, and a consolidated statement of changes in equity. Also prepare the retained earnings columns of the consolidated statement of changes in equity for the year.
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Mars Jupiter ASSETS Non-current assets at cost 550,000 225,000 Depreciation 220,000 330,000 187,500 67,500 157,500 Investment in Jupiter Current assets Inventories 225,000 67,500 Trade receivables 180,000 90,000 Current account – Jupiter 22,500 Bank 36,000 18,000 463,500 175,500 Total assets 981,000 333,000 EQUITY AND LIABILITIES Capital and reserves £l common shares 196,000 90,000 General reserve 245,000 31,500 Retained earnings 225,000 135,000 256,500 666,000 Current liabilities Trade payables 283,500 40,500 Taxation 31,500 13,500 Current account – Mars 22,500 315,000 76,500 Total equity and liabilities 981,000 333,000 Sales 1,440,000 270,000 Cost of sales 1,045,000 395,000 135,000 Gross profit Expenses Dividends received from Jupiter 135,000 123,500 90,000 9,000 NIL Profit before tax 280,500 45,000 Income tax expense 31,500 13,500 Profit for the period Dividends paid 249,000 31,500 180,000 11,250 69,000 20,250 Retained earnings brought forward from previous years 156,000 114,750 225,000 135,000
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