Intra group sales

I have another question which you explained yesterday but in this example I assume that they made mistake. The draft statements of financial position of Ping Co and Pong Co on 30 June 20X8 were as follows. STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 20X8 Ping Co Pong Co $ $ Assets Non-current assets Property, plant and equipment 50,000 40,000 20,000 ordinary shares in Pong Co at cost 30,000 80,000 Current assets Inventory 3,000 8,000 Owed by Ping Co 10,000 Receivables 16,000 7,000 Cash 2,000 – 21,000 25,000 Total assets 101,000 65,000 Equity and liabilities Equity Ordinary shares of $1 each 45,000 25,000 Revaluation surplus 12,000 5,000 Retained earnings 26,000 28,000 83,000 58,000 Current liabilities Owed to Pong Co 8,000 – Trade payables 10,000 7,000 18,000 7,000 Total equity and liabilities 101,000 65,000 Ping Co acquired its investment in Pong Co on 1 July 20X7 when the retained earnings of Pong Co stood at $6,000. The agreed consideration was $30,000 cash and a further $10,000 on 1 July 20X9. Ping Co's cost of capital is 7%. Pong Co has an internally-developed brand name – 'Pongo' – which was valued at $5,000 at the date of acquisition. There have been no changes in the share capital or revaluation surplus of Pong Co since that date. At 30 June 20X8 Pong Co had invoiced Ping Co for goods to the value of $2,000 and Ping Co had sent payment in full but this had not been received by Pong Co. There is no impairment of goodwill. It is group policy to value NCI at full fair value. At the acquisition date the NCI was valued at $9,000. Required Prepare the consolidated statement of financial position of Ping Co as at 30 June 20X8. they record this amount 2000 cash in transit . and added to cash but not deducted from the AR . why?

in this an answer? because Subsidiary owns 10000$ and parent owns to subsidiary 8000 as a result after cancellation it remains 2000 and cash in transit is deducted from this amount . therefore it remains 0

Sir I have another question about consolidated PL statement The following information relates to Brodick Co and its subsidiary Lamlash Co for the year to 30 April 20X7. Brodick Co Lamlash Co $'000 $'000 Sales revenue 1,100 500 Cost of sales (630) (300) Gross profit 470 200 Administrative expenses (105) (150) Dividend from Lamlash Co 24 – Profit before tax 389 50 Income tax expense (65) (10) Profit for the year 324 40 Brodick Co Lamlash Co $'000 $'000 Note Dividends paid 200 30 Profit retained 124 10 Retained earnings brought forward 460 48 Retained earnings carried forward 584 58 Additional information (a) The issued share capital of the group was as follows. Brodick Co: 5,000,000 ordinary shares of $1 each Lamlash Co: 1,000,000 ordinary shares of $1 each (b) Brodick Co purchased 80% of the issued share capital of Lamlash Co on 1 November 20X6. At that time, the retained earnings of Lamlash stood at $52,000. Required Insofar as the information permits, prepare the Brodick group consolidated statement of profit or loss for the year to 30 April 20X7, and extracts from the statement of changes in equity showing group retained earnings and the non-controlling interest. First we know that we calculate and added 6 monthly .taking into account this fact why we didnt add 6 monthly remaning profit when calculating Added on acquisition of subsidiary? They only calculated like that Added on acquisition of subsidiary Share capital 1000k RE 52k and 40% of this which is clear. why they didnt add 6 monthly profit remaning profit which based on from 1May 2006 to 30 Oct?

One at a time Rasad, one at a time! First post: parent sells to subsidiary or subsidiary sells to parent ... what's the difference? None! The selling / transfer value of the sale is deducted from both the combined revenue figure and the combined cost of sales figure Don't even THINK about adjusting for any unrealised profits - if I sell goods to you for $50, how much have you bought from me? Answer, $50 Now adjust for the pup, if appropriate - calculate the pup and add that calculated figure to the cost of sales on the entity that made the sale OK?

Posts 2 and 3: deal with the cash in transit first ... in Pong's figures, add $2,000 to the cash figure and deduct $2,000 from the account receivable "Owed by Ping $10,000" That now leaves $8,000 account receivable in the Pong figures and a corresponding $8,000 account payable in the Ping figures These two cancel out against each other It may be that you haven't realised that the intra-group accounts have been shown separate from the general figures for accounts receable and accounts payable OK?

At the date of acquisition we have to find the value of Lamlash's fair valued net assets These comprise Lamlash's share capital, the retained earnings figure and any fair value adjustments (there are none in this question) We know that the share capital is $1,000,000 and WE ARE TOLD the figure for Lamlash's retained earnings is $52,000 ... so why are you trying to change that retained earnings figure? OK?

Thanks a lot Mr MikeLittle.

You're welcome