Consolidated P&L — OpenTuition Forums

CCamelia10y ago

Hi John, I have the following problem. Helsinki bought 75% of Stockolm at 30.06.20X6. At 31.12.20X6, the figures in P&L were: Helsinki Stockolm Revenue 200.000 100.000 Cost of sales 110.000 50.000 Profit for the year 27.000 14.000 During post aquisition, S sold goods to H. The goods originally cost 10 million and they were sold to H at a 25% mark-up. At 31.12.20x6, H still had 40% of these goods in inventory. Calculate the consolidated P&L. I calculated the PURP and it resultes to be 2500. The sales, the, were 12.500 (deductible from revenue & cost of sales). The amount that remained in inventory was 1000 (40% of 2500). But I don't understand why the cost of sales is calculated as below (on solutions page). 110.000 + (6/12 * 50.000) - 12.500 + 51.000 And also I don't understand why NCI share is calculated as below: 25% * (7000 - 1000) = 1500 Please help me with an answer. Camelia

John MoffatTutor10y ago#1

The answer to both of your problems is because H bought their share of S half way through the year. So the post-acquisition sales (in total) of S are only half of 50,000. Also, the pst acquisition profit of S is only half of 14,000. I hope that clears up your problem, but if not then please do ask again :-)

CCamelia10y ago#2

John. I still don't get why is that the amount of 51.000 is added (and not 1000) and why the NCI is not calculated as 25% * 6000 - 25% * 1000. Thank you, Camelia

John MoffatTutor10y ago#3

The cost of sales should be 110,000 + (6/12 x 50,000) - 12,500 + 1,000 = 123,500 (The 51,000 must be a typing mistake). The NCI is correct at 25% x (7,000 - 1,000). 25% is their share; 7,000 is the post-acquisition profit in S (50% x 14,000); the 1,000 is the PURP that needs removing from S's profit because it is S who had sold the goods to H.

CCamelia10y ago#4

Thank you for the answer. Is very clear now. :)

John MoffatTutor10y ago#5

That's great - I am very pleased :-)

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