Question 2:
a.
Adam Limited acquired 80% of the share capital of Driver Co. on 1 June 2019. The
financial statement summary for both companies for the year ended 31 May 2020 are as
follows:
Adam Driver
$000 $000
Revenue 8,400 3,200
Cost of sales (4,600) (1,700)
Gross profit 3,800 1,500
Operating expenses (2,200) (960)
Profit before tax 1,600 540
Tax (600) (140)
Profit for the year 1,000 400
Goods costing $1,000,000 were sold by Adam Limited to Driver Co for $1,500,000. At 31 May
2020, 30% of these goods remained Driver's inventory.
Required:
Prepare the Adam group's consolidated statement of profit or loss for the year ended 31 May,
2020. (7 marks)
