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Morning John,
I finished watching the Consolidated P/L lectures yesterday and at giving the questions a try. There is one that I am very confused on.
Panther acquired 80% of the equity shares in seal on 31/8/x2. Statement of PL for panther and seal for year end 31/12/x2 below:
Panther revenue 100000
Panther COS 25000
Seal rev 62000
Seal COS 16000During oct x2 sales of 6000 were made by Panther to seal, none of these items remained in inventory.
My answer:
100000 + (4/12 * 62000)
However, the answer at the back deducts the intra sales also? Im confused, I recall you mentioning a few times that If all were sold then there were no issues, and only if there are items in inventory then we need to make adjustments?
Please could you clarify this point. Slightly confused here
Thank you
You are confusing two separate things.
As regards the PURP, it is that that only applies to any goods sold from one company to the other that are still in inventory.
However, as far as the revenue is concerned, in the consolidated SOPL we only show the revenue and purchases from outside of the group. All of the inter-group sales are subtracted from the total revenue and from the total purchases (whether or not any of the goods are still in inventory).
Oh I see, there’s so many + and – I think my brain had gotten confused.
Thank you =)
All clear now
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