Question

L’Oréal reports the following income statement accounts for the year ended December 31, 2014 (euros in millions). Prepare the income statement for this company for the year ended December 31, 2014, following usual IFRS practices.

Net profit	€4,908.6	Income tax expenses	€1,111
Finance Cost	31.4	Profit before tax expenses	6,019.6
Net sales	22,532	Research and development expenses	760.6
Gross profit	16,031.3	Selling, general and administrative expenses	4,821.1
Other income	2,118	Advertising and promotion expenses	6,558.9
Cost of sales	6,500.7	Finance income	42.3

Short answer

Answer

The net income of the business entity is equal to€4,908.60.

Step-by-step solution

Step-by-Step SolutionStep 1: Definition of Sales Revenue

Sales revenue can be defined as the benefits that a business entity generates from selling a product, either manufactured or purchased. It is reported at the top of the income statement.

Income statement

Particulars	Amount €
Net sales	€22,532
Less: Cost of sales	(6,500.7)
Gross profit	16,031.3
Less: Selling, general, and administrative expenses	(4,821.1)
Less: Advertising and promotion expenses	(6,558.9)
Less: Research and development expenses	(760.6)
Less: Finance cost	(31.4)
Add: Finance income	42.3
Add: Other income	2,118
Profit before tax expenses	6,019.6
Less: Income tax	(1,111)
Net profit	€4,908.6