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While auditing the consolidated statmnt of profit and loss, the auditor discovers a material transaction of $400,000 sale from associate company( in which parent holding is 30%) to parent. By how much should the auditor request the directors to amend the consolidated cost of sales??
Ans: nil
how??? :/Zero
The share of the associate’s profits after tax are the only element that go into the consolidated statement of income.
By taking the entire adjustment into the associate statement of income and then only taking the group’s share of that adjusted profit after tax, we automatically remove or add the appropriate value
I believe that Kaplan (and BPP?) tackle the issue a different way
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