Bla Limited sells inventory to its parent, Whi Limited at cost price plus 125% mark-up. • Closing inventories in the records of Whi Limited on 30 June 2022 amount to R157 500. • Net realisable value of inventory on hand in the books of Whi limited amounts to R107 500 on 30 June 2022. Ignore tax implications Required:Clearly illustrate how write-down of inventory will be with regard to the above information, showing inventory at selling price, value according to the group, net realisable value, write-down in Whi Limited’s records, Unrealised profit from the group’s perspective and additional elimination of unrealised profit required through pro forma consolidation journal
Bla Limited sells inventory to its parent, Whi Limited at cost price plus 125% mark-up. • Closing inventories in the records of Whi Limited on 30 June 2022 amount to R157 500. • Net realisable value of inventory on hand in the books of Whi limited amounts to R107 500 on 30 June 2022. Ignore tax implications Required:Clearly illustrate how write-down of inventory will be with regard to the above information, showing inventory at selling price, value according to the group, net realisable value, write-down in Whi Limited’s records, Unrealised profit from the group’s perspective and additional elimination of unrealised profit required through pro forma consolidation journal
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Bla Limited sells inventory to its parent, Whi Limited at cost price plus 125% mark-up. • Closing inventories in the records of Whi Limited on 30 June 2022 amount to R157 500. • Net realisable value of inventory on hand in the books of Whi limited amounts to R107 500 on 30 June 2022. Ignore tax implications
Required:Clearly illustrate how write-down of inventory will be with regard to the above information, showing inventory at selling price, value according to the group, net realisable value, write-down in Whi Limited’s records, Unrealised profit from the group’s perspective and additional elimination of unrealised profit required through pro forma consolidation journal
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