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unrealized profit

This topic has 1 reply, 2 voices, and was last updated 3 years ago by John Moffat.

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December 19, 2020 at 8:36 am #600296
Daroo
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On 1 April 2017 Hevix acquired 116 million of Branch’s 145 million ordinary shares for an immediate cash payment of $210 million and issued at par one 10% $100 loan note for every 200 shares acquired. The inventory of Branch at 31 March 20X9 includes goods supplied by Hevix for a sale price of $56 million. Hevix adds a mark-up of 40% on cost to all sales.
What is the amount of the unrealized profit arising from intra-group trading
?????? ??????:
a. $56 million
b. $33.6 million
c. $22.4 million
d. $16 million
Please, can u help me to answer this question?
December 19, 2020 at 3:56 pm #600333
John Moffat
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Why are you attempting questions for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers.
The mark-up is 40% of cost and therefore the unrealised profit in inventory is 40/140 x $56M.
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