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H acquired 80% of S on 1 July 2002. In the post acq period H sold goods to S at a price of $12 million. These had cost H $9 million. During the year to 31 March 2003 S had sold $10 million of these goods for $15 million.
How will this affect group COS in the Consol SOPL for the year ended 31 march 2003Cancel the intra-group trade IN FULL, so …
Dr Revenue $12 million
Cr Cost of Sales $12 millionNow eliminate the pup.
Pup on the full transaction was $3 million and S has sold 5/6 f the goods by the end of the year
So there’s 1/6 left in inventory
1/6 x $3 million = $500,000
Dr Cost of Sales $500,000
Cr Combined Inventory $500,000OK?
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