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Hi chris,
BPP QUESTION 260.
Jarvis co owns 30% of Mclintock co. During the year to the 31 December 20×4 Mclintock sold 2M of goods to jarvis co, of which 40% were still held in inventory by Jarvis at the year end. Mclintock co applies mark-up of 25% on all goods sold.
What effect would the above transactions have on group inventory at 31 December 20×4?
ANS: No effect on group inventory.
My thought: A is selling to P so effectively we will DR group RE and CR Inventory 48000.Confused with the answer to the question. thanks.
Hi,
The standard entry now for an associate PUP is to DR Retained earnings CR Investment in associate, regardless of the direction of the sale. There will therefore be no impact on the group inventory.
Thanks
Hi, but in your lecturer, you said that if A sell goods to P, the entry should be Dr Group Re, Cr Group inventory.Please help me to explain.Thanks
Hi,
The accounting treatment has been changed to make it more straightforward.
Thanks
Hi, as I know, there are some changes in accounting treatment recently ,ei the calculation of contract asset, the entry made when A sell goods to P.Could you please list more changes in oder that I can apply the correct method in the real exam? Thanks
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