CSFP

QUESTION

Hillusion acquired 80% of Skeptik on 1 July 20X2. In the post-acquisition period Hillusion sold goods to Skeptik at a price of $12 million. These goods had cost Hillusion $9 million. During the year to 31 March 20X3 Skeptik had sold $10 million (at cost to Skeptik) of these goods for $15m million. How will this affect group cost of sales in the consolidated statement of profit or loss of Hillusion for the year ended 31 March 20X3? A Increase by $11.5 million B Increase by $9.6 million C Decrease by $11.5 million D Decrease by $9.6 million

ANSWER

122 C
$m
Decrease 12.0 Increase ($2m × 25% (profit margin)) 0.5 Net decrease 11.5