- This topic has 3 replies, 2 voices, and was last updated 6 years ago by
.
- Posts
On 1 april 20×4 Penfold acuired 80% of Superted’s equity shares in a share for share exchange. Extracts from individual F/S of Penfold and Superted as at 30 Sept 20×4 are shown below
Penfold Superted
$000 $000
Trade receivables 32400 38000During the year Penfold traded with Superted and had a payable of $6 million at 30 Sept 20X4. Superted’s receivable balance differed from this due to a $2 million payment from Penfold not being received until Oct 20X4
What will be reported as receivables on the consolidated SOFP as at 30 Sept 20X4?
Sir in my opinion the answer should be
32400 + 38000 – 2000 – 6000 = 62400.
But in kit the ans is 66400.
Why is that so?Hi,
The answer is correct. We deal with the cash in transit first, where we DR Bank CR Receivable with the $2m.
We then eliminate the remaining intra-group balance of $6m, where we DR Payable CR Receivable.
The two entries to receivables reduce the consolidated balance by $8m in total and the overall balance to the answer above.
Thanks
- You must be logged in to reply to this topic.