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please can you assist with this question. haba which is a parent company made total sales of goods to zara for $8 million and aim to earn a profit of 30% on cost. included in the inventory of zara at 31st december 2019 are goods purchased from haba for $5.2 million.
Given that the profit is 30% of cost, it is 30/130 times the selling price.
Haba sold the inventory to Zara at a price of $5.2M, and therefor the unrealised profit is 30/130 x $5.2M = $1.2M
Have you watched me lectures on mark-ups and margins, and on consolidations?
The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
yes i have but the confused part is the solution on the study pack shows that unrealised profit is $900,000
It would seem that there is an error in the answer.
If it is a question from the BPP Revision Kit then tell me which one I and I will check 🙂Thank you so much, answer was incorrect. 1.2 is what I initially got.i appreciate
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