- This topic has 1 reply, 2 voices, and was last updated 8 years ago by
.
- Posts
rivision34.16/ Lexus has owns 60% of voting equity of Nexus. he following information relates to the results of Lexus and Nexus for the year.
Nexus Lexus Revenue 350$ 150$
COS 200$ 60$
Gross profit =150$ =90$ During the year, Nexus sold goods to Lexus for $50,000. Lexus still had 40% of these goods in inventory at the year end. Nexus uses a 25% mark up on all goods.
What were the consolidated sales and cost of sales of the Lexus group at the year end?
Sales Cost Of Sales
A $500,000 $210,000
B $500,000 $214,000
C $450,000 $210,000
D $450,000 $214,000
The answer is D.
PUP= 50,000 x 25/125 x 40%= $4,000
Revenue(350+15-50*) =450,000
Cost of sales(200+60-50*+4)=214,000*to remove intragroup sales Lexus group $’000
#why we include 100% of sale and COS of subsidiary in consolidated sale and COS ,why not only 60%?We always remove all of the intra-group sales so as to only show the sales and purchases made externally to the group.
Do watch my free lectures on this, because I explain in detail how and why we do this.
The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.
- You must be logged in to reply to this topic.