Sir
R owns 30% of E . E sold goods to R for $ 160 000. E applies a one third markup on cost. R still got 25% on inventory at Y end.
what amount should be deducted from consolidated retaining earning.
I got 160 x 1/3 X 25% x 30%= 4000, but the answer is 3000. I dont understand why.
thx
Ask the Tutor ACCA FR
PUP associet
Because the profit is described as a 1/3 mark-up on cost so the profit element is .3333/ 1.333333 so your calculation should be
160 x 1/4 x 25% x 30% = 3,000
You have wrongly treated it as a gross profit of 1/3
Ok?
ok Sir thanks
You're welcome
Sign in to reply to this topic.