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1. On 1 October 20X4, the fair values of Sling Co’s net assets were equal to their carrying amounts with the exception of some inventory which had cost $3m but had a fair value of $3.6m. On 30 September 20X5, 10% of these goods remained in the inventories of Sling Co.
2. In a second scenario, kindly assume, all the inventories are sold.
Kindly explain with the entries and affects on the workings.
Dear Sir,
I would appreciate if you could kindly answer the question at your earliest.
Thanks.
khan.durrani07@gmail.com wrote:1. On 1 October 20X4, the fair values of Sling Co’s net assets were equal to their carrying amounts with the exception of some inventory which had cost $3m but had a fair value of $3.6m. On 30 September 20X5, 10% of these goods remained in the inventories of Sling Co.
Hi,
There is an adjustment at the acquisition date of $0.6 m to record the fair value of inventory. This is recorded in the net assets working as an increase.
There is then an adjustment at the reporting date to reflect that 10% of these goods are still held. This is also recorded in the net assets working.
If the inventories are sold then there is no adjustment to make at the reporting date.
Thanks
khan.durrani07@gmail.com wrote:Dear Sir,
I check the forum approximately twice a week. Once midweek and once at the weekend. I check it more regularly closer to the exams when there are more post on the forum.
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