Dear Mike
Could you please help to clarify below question
Patula Co acquired 80& of Sanka Co on 1 October 20x5. At this date some of Sanka Co's inventory had a carrying amount of 600.000 but a fair value of 800.000. By 31 dicember 20x5 70% of this inventory had been sold by Sanka
The individual statements of financial position at 31 December 2.05 for both companies show the following:
Patula 3250
Sanka 1940
What will be the total inventory figure in teh consolidated statement of financial position of Patula at 31 December 20x5?
3250+1940+(800-600*30%) 5250000
I don t understand why 800-600.
In my answer I added 30% of 600.000 as the inventory should be value at the lowest of cost and releasable price
What do I miss here.
Could you please help?
Thanks a million
Gabriella
Ask the Tutor ACCA FR
Inventory
This is where IFRS 13 comes in - Fair Values
That $600,000 carrying value of inventory at date of acquisition needs to be valued at fair value
Only 30% of that fair value gain remains in Sanka's inventory so 30% of the fair value increase is appropriate to add on to the combined inventory = an increase of $60,000
OK?
Of course. I don t know where I thought when I read the question. Thanks for your reply.
Gabriella
You're welcome
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