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1. (related party) What is it mean by two entities just became they have a director or other member of key management personnel in common ?
Does it mean that 2 entities have same director or common key management personnel are related parties ???
2. do we need to know the disclosure requirements and the number of IAS or IFRS ??? Cuz like when we answer the question, do we have to state specific number of ifrs or ias ??
3. inquiry regarding the question, stated below
Mug has owned 80% of the ordinary shares of Glass for many years. During the current year, Mug sold inventory to Glass for $250,000 making a gross profit margin of 40%. One quarter of this inventory remains unsold by Glass at the reporting date. The tax rate is 20%.
my opinion : shouldnt the profit on the sale should be (71429=250,000/140×40) ??? cuz the answer sheet says that it’s (100,000=250,000×40%).
should we multiply 40 dividing by 140 cuz 250,000 already included gross profit margin so we should base it with 140% and multiply 40 ????
thank you !!
1. It means that if one director is a director in two different companies then the companies under their directorship are not necessarily related and you’d need to look at the influence the director has over each of the companies to see if they are related.
2. No, you don’t need to know the numbers and the disclosure is not examined unless it is related parties or operating segments.
3. You should really be able to work out the difference between a mark-up and margin at this level. If it is a 40% gross profit margin then the profit is 40% of the sales made, given we’ve made $250,000 sales then the profit will be 40% of that (i.e. 40% x 250,000).