MS Group's total profit for period on their consolidated income statement is £31,000. This includes adjusting for their share of joint venture JV2…

To determine the share of the joint venture's profit, we must first calculate MS Group's standalone profit. This is found by taking the operating profit (£41,000) and subtracting the finance cost (£3,000) and tax (£11,000), which results in £27,000.

The group's consolidated total profit is given as £31,000. This figure is the sum of the group's standalone profit and its share of the joint venture's profit. Therefore, the share of profit from the joint venture is the difference: £31,000 (Consolidated Profit) - £27,000 (Standalone Profit) = £4,000.

Under the equity method prescribed by IAS 28, dividends received from a joint venture (£5,000) are not treated as income but as a reduction in the investment's carrying amount.

B. £9,000: This figure incorrectly adds the dividend received to the calculated share of profit.

C. £1,000: This results from an incorrect calculation, likely by improperly subtracting the dividend from profits.

D. £7,000: This is derived from an incorrect calculation, likely by omitting the finance cost when calculating standalone profit.

E. £6,000: This is a distractor value with no logical basis in the equity accounting method.

F. £5,000: This incorrectly assumes the dividend received is the share of profit to be recognized in the income statement.

1. IFRS Foundation

IAS 28 Investments in Associates and Joint Ventures. Paragraph 10 states: "The investor’s share of the investee’s profit or loss is recognised in the investor’s profit or loss. Distributions received from an investee reduce the carrying amount of the investment." This confirms that the share of profit is recognized as income

while dividends are not.

2. Kieso

D. E.

Weygandt

J. J.

& Warfield

T. D. (2020). Intermediate Accounting

IFRS Edition (4th ed.). Wiley. Chapter 17

"Investments

" details the equity method. It specifies that the investor increases the investment account for its share of the investee's net income and decreases it for dividends received. The share of net income is reported on the investor's income statement.

3. Columbia University. (n.d.). Course B8006: Financial Statement Analysis and Valuation

Lecture 6: Intercorporate Investments. Course materials explain that under the equity method

the investor recognizes its proportionate share of the investee's earnings in its income statement

distinct from any cash dividends received.