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Hello John,
Why do we have to subtract the 8000 $ which P should receive from S?
I don’t understand the logic and I cannot find solutions either in your notes or your lectures.
S owes P 8000, why not showing it?
Thanks in advance
It is explained in the lectures, and the answer to the example is also printed in the notes (if you look at the contents page you will find where the answers are printed).
The whole purpose of producing consolidated statements is to show the position as though it were all one company (even though legally it is not).
We show the receivables from outside the group (and therefore eliminate receivables from within the group) and similarly we only show payables to outside the group (and therefore eliminate payables within the group).
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