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(iii) At 30 September 2011, Saracen’s inventory included goods bought from Paladin (at cost to Saracen) of $2·6 million. Paladin had marked up these goods by 30% on cost. Paladin’s agreed current account balance owed by Saracen at 30 September 2011 was $1·3 million.
-> Pup, i hv understood but paldin’s current account agreed so why should we deduct 1.3 m from Paldin rbles and saracen pbles. I mean current account agreed so why to do adjustment.
Because when we (effectively) cross add these figures for the consolidation, we’re going to be showing $1.2m payable by us to ourselves having a receivable of $1.2m receivable from ourselves
We ALWAYS eliminate intra-group balances.
There’s a couple of examples of this in the free course notes – have you worked through those notes?
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