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Q.Boo acquired 80% of equity shares for $300000 on 1Jan 2008. At the date of acquisition Goose had retained earnings of $190000. On 31 Dec 2008 Boo despatched goods which cost 80000 to Goose ,at an invoiced cost of $100000. Goose received the goods on 2 Jan 2009and recorded the transaction then.It is the group policy to value the NCI at acquisition at fair value.The fair value of NCIat acquisition date is 60000.
Prepare a draft consolidated statement of profit or loss and other comprehensive income and statement of financial position.The two companies draft financials? statements as at 31 dec 2008.
Here Goose recorded the transaction on 2 jan 2009. So I assumed that given financial statements of goose wouldnt include the transaction.But BPP has adjusted the cost of sales also.
Those goods belong somewhere in the group – just because G4S has possession of the goods does not preclude them from being part of the group’s assets
Accelerate the goods into the hands of Goose – make the adjustment of the face of the question paper as well as in the answer booklet
In Goose’s records we need to increase purchases (and therefore also closing inventory) and the liability to Boo in the Payables Account
This has no affect on Goose cost of sales nor on the Goose profits for the year but it will increase inventory in current assets and payables in current liabilities on the Goose statement of financial position
Now for the consolidation adjustments:
Presumably now we have recorded those goods in transit in Goose inventory and payables, the Boo Payable account in Goose now equals the Goose Receivable account in Boo.
So we can cancel the Goose Receivable in Boo against the Boo Payable in Goose
Now deal with the intra-group trade – reduce combined revenue and combined cost of sales by $100,000
Now for the pup
There is $20,000 pup in those goods in transit so we need to add $20,000 to Boo’s cost of sales and reduce combined inventory by $20,000
And that should do it!
OK?
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