Unrealised profit to be eliminated from cbs for
Stock of x includes 25000/- purchased from h which sells at cost+25%
Stock of h includes 36000/- purchased from x which sells goods at cost+ 20%
H has 35%shares in x...
Solution is given as consolidated p&l a/c 3850
To investment in associate 3850
My doubt is why are they adjusting consolidated p&l for both it will be only stock of x Ltd??
I could not get the calculations but theoretically, if parent made a sale, all PURP will be charged in the parents books. If, Subsidiary/ associate made the sale, then all PURP will be charged between the H and X in their ownership ratio. In Income statement:
If A is the seller - reduce the line “share of A’s PAT”
If P is the seller - increase P’s COS
In balance sheet group accounts
If A is the seller - reduce A’s Retained earnings and P’s Inventory
If P is the seller - reduce P’s Retained Earnings and the “Investment in Associate” line
I hope someone will post a solution for this.
| Originally posted by : yasaswi gomes | ||
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I still did not get it. Many websites are telling us to reduce the sale cost from group sales and cos. Then, increase cos by purp and reduce inventory by purp.
But either for parent to sub or sub to parent intragroup sales, we use consolidated reserves. I am not able to get hold of the third entry example. Don't foegwt the dta.
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