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Dear Sir,
I was working on question 376, Kaplan revision kit and found the answer was a bit confusing.
To calculate NCI’s attributable profit for the period, the answer use Net asset table for computation. Only changes in Retained earning got included in the table.
The question said “On 26 March 20X2, Pyramid sold and despatched goods to Square, which Square did not record until they were received on 2 April 20X2. Square’s inventory was counted on 31 March 20X2 and does not include any goods purchased from Pyramid.”
The accounting year in the question ended at 31 March 20X2.
Therefore, there was an UP of 500 (P has 50% mark-up on cost). However, even though Kaplan did adjust for this in the consolidated FP, they didn’t adjust for the UP in the Net Asset table. Is this because GIT was involved? And if it arrives in the next accounting period then we can skip it on Net Asset to find the NCI since it’s NCI?
Many thanks,
Gilly
Hi,
I’ve not got the Kaplan revision kit with me but for the GIT we need to record the inventory by DR Inventory CR Payables on the face of the group SFP, and then eliminate the unrealised profit on the inventory.
As the initial entry to the inventory and payables does not impact the profit, and the removal of the unrealised profit is a group adjustment that does not impact S (P is the seller), we do not need to adjust the net assets working.
Thanks
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