The balance sheet of Dot Co. for the year ended 31 December 20X2, together with comparative figures for the previous year, is shown in Figure (all figures :000).

You are informed that there were no sales of non-current assets during 20X2 and new shares and debentures issued in 20X2 were issued on 1 January. Calculate operating profit and net cash flow from operations and prepare a cash flow statement for the year 20X2, consistent with IAS 7, as far as the available information permits. Comment on the implications of the statement, but this time work on the assumption that non-current assets that had originally cost :30,000, with accumulated depreciation of :12,000, had been sold during the year ended 31 December 20X2 for :11,000.

Q47

1. Explain the concepts of:

a. subsidiary;

b. joint venture;

c. associate;

d. an investment that is none of the above. Outline and discuss the usual approaches to the accounting treatment in each case in consolidated statements.

2. A Co. owns 75 per cent of the shares in B Co., bought when the reserves of B were :200,000. The individual balance sheets of A and B as at 30 June 20X8 are given in Table.

During the year, B has sold goods to A at a profit margin of 25 per cent on cost. Of these goods :50,000 remain in A’s closing inventory as at 30 June 20X8. Also B owes A :2,000 as at 30 June 20X8. Prepare the consolidated balance sheet as at 30 June 20X8.