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P co acquired 80% S co on 1 october 20X5. At this date, some of S co’s inventory had a carrying amout of £600000 but a fair value of £800000. By 31 december 20X5, 70% of this inventory had been sold by S co.
Individual statements of financial position at 31 december 20X5 for both companies show the following:
inventories $’000
p co: 3250
s co : 1940answer is 5250000 (3250+1940+(800-600*30%)
my question is why does we not take 1940*80%*3/12 because we have acquired only 80% and from 1 october – 31 december which is 3 months
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