- This topic has 3 replies, 2 voices, and was last updated 3 months ago by
P2-D2.
P2-D2.-
Posts
-
thulasikaur
- Topics: 5
- Replies: 4
- ☆
Hi sir or any friend,
Parket Co acquired 60% of Suket Co on 1 January 20X7. The following extract has been taken from the individual statements of profit or loss for the year ended 31 March 20X7:
Parket Co ($) Suket Co($)
Cost of sales 710,000 480,000
Parket Co consistently made sales of $20,000 per month to Suket Co throughout the year. At the year end, Suket Co held $20,000 of this in inventory. Parket Co made a mark-up on cost of 25% on all sales to Suket Co.
What is Parket Co’s consolidated cost of sales for the year ended 31 March 20X7 (to the nearest whole $)?
answer: 710,000 + (480,000 x 3/12) – (20,000 x 3) + (20,000 x 25/125) = $774,000
My ques: why minus (20,000 x 3), should minus the inventory amount $20000 only right? bcs $20000 only held in inventory..pls correct me if im wrong..Thank you.
P2-D2
- Topics: 4
- Replies: 6115
- ☆☆☆☆☆
Hi,
The intra-group sales are $20,000 per month and we have controlled the subsidiary for three months since the acquisition date (Jan to March), hence why it has been multiplied by the 3.
Thanks
thulasikaur
- Topics: 5
- Replies: 4
- ☆
Hi Sir, how about the $20000 inventory ? why they did not deduct
P2-D2
- Topics: 4
- Replies: 6115
- ☆☆☆☆☆
Hi,
We adjust for the profit on the inventory still held and not the full value of the inventory. You can see them adjusting for the unrealised profit in the (20,000 x 25/125) element of the calculation.
Thanks
thulasikaur
P2-D2- You must be logged in to reply to this topic.