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Confirmation of balances due to other group companies

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Confirmation of balances due to other group companies .
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© The Institute of Chartered Accountants in England and Wales 2010 11 of 16 Exhibit 3: Ed Holdings – Summarised consolidation schedules for the year ended 30 April 2010 (including notes added by Bill Brown) Statement of financial position Ed Holdings Aducit Bhagat Adjustments Notes Group £'000 £'000 £'000 £'000 £'000 Assets Non-current assets Property, plant and equipment 45 2,181 788 3,014 Goodwill - - - 9,490 1 6,251 (3,239) 4 Investments 10,010 - 15 (10,010) 1 15 Current assets Inventories - 3,380 2,947 6,327 Trade receivables 4,292 4,849 9,141 Intercompany receivables 2,045 - 1,474 (3,519) 2 - Cash and cash equivalents 737 (706) 382 413 Total assets 12,837 9,147 10,455 (7,278) 25,161 Equity and liabilities Equity Share capital 200 10 510 (520) 1 200 Retained earnings, brought forward 4,523 973 1,758 (1,758) 4 5,496 Profit (loss) for the year 54 (867) 2,962 (100) 2 568 (1,481) 4 Non-current liabilities Long-term borrowings 8,000 - - 8,000 Current liabilities Trade and other payables 37 5,702 4,513 10,252 Intercompany payables - 3,329 90 (3,419) 2 - Current tax payable 23 - 622 645 Total equity and liabilities 12,837 9,147 10,455 (7,278) 25,161 Ed Holdings Aducit Bhagat Adjustments Notes Group £'000 £'000 £'000 £'000 £'000 Income Statement Revenue 767 23,407 28,097 (767) 3 37,455 (14,049) 4 Cost of sales - (19,703) (19,455) 9,727 4 (29,431) Distribution costs - (985) (1,293) 647 4 (1,631) Administrative expenses (740) (3,547) (3,395) (100) 2 (5,318) 767 3 1,697 4 Finance income / (cost) 50 (39) 31 (15) 4 27 Profit before tax 77 (867) 3,985 (2,093) 1,102 Income tax expense (23) - (1,023) 512 4 (534) Profit for the year 54 (867) 2,962 (1,581) 568
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© The Institute of Chartered Accountants in England and Wales 2010 12 of 16 Bill Brown’s Notes 1. This adjustment eliminates investments in subsidiaries. The equivalent adjustment in the prior year was £10,000 and related only to the elimination of share capital in Aducit. The increase in the current year is due to the acquisition of Bhagat for £10 million. 2. This adjustment eliminates intercompany balances. The difference of £100,000 between the receivables and payables has been written off to the income statement. 3. This adjustment eliminates the management charges from Ed Holdings to its subsidiaries as these do not represent true income or expenses for the group. 4. This adjustment removes from the income statement half of Bhagat’s results as the subsidiary was only acquired on 31 October 2009. In addition, all pre-acquisition retained earnings have been eliminated and treated as part of the goodwill calculation. Exhibit 4: Summary of audit work performed on the consolidation schedules This memorandum summarises work performed on the consolidation schedules prepared by the group financial controller, Ed Tyrone ( Exhibit 3 ). Each column is considered in turn. Ed Holdings
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Confirmation of balances due to other group companies The...

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