Black Limited sells inventory to its parent, White Limited at cost price plus 125% mark-up. • Closing inventories in the records of White Limited on 30 June 2022 amount to R157 500. Net realisable value of inventory on hand in the books of While limited amounts to R107 500 on 30 June 2022. • Ignore tax implications Required 1.1 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 White Limited's records, Unrealised profit from the group's perspective and additional elimination of unrealised profit required through pro forma consolidation journal. 1.2 Show how the journal entry would be recorded in the books of White Limited on 30 June 2022 in accordance with IAS 2. And also show pro forma consolidation journal for the group. 1.3 Show how the pro forma journal entry/ies would be in the books of White Limited Group as of 30 June 2022, assuming that White Limited did not recognise the write- down to net realisable value in its individual records
Black Limited sells inventory to its parent, White Limited at cost price plus 125% mark-up. • Closing inventories in the records of White Limited on 30 June 2022 amount to R157 500. Net realisable value of inventory on hand in the books of While limited amounts to R107 500 on 30 June 2022. • Ignore tax implications Required 1.1 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 White Limited's records, Unrealised profit from the group's perspective and additional elimination of unrealised profit required through pro forma consolidation journal. 1.2 Show how the journal entry would be recorded in the books of White Limited on 30 June 2022 in accordance with IAS 2. And also show pro forma consolidation journal for the group. 1.3 Show how the pro forma journal entry/ies would be in the books of White Limited Group as of 30 June 2022, assuming that White Limited did not recognise the write- down to net realisable value in its individual records
Financial & Managerial Accounting
13th Edition
ISBN:9781285866307
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter13MJ: Mornin' Joe
Section: Chapter Questions
Problem 3IFRS
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Question
![QUESTION 1
Black Limited sells inventory to its parent, White Limited at cost price plus 125% mark-up.
Closing inventories in the records of White Limited on 30 June 2022 amount to R157 500.
Net realisable value of inventory on hand in the books of While limited amounts to
R107 500 on 30 June 2022.
•
•
• Ignore tax implications
Required
1.3
1.1 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 White Limited's records, Unrealised profit from the
group's perspective and additional elimination of unrealised profit required through
pro forma consolidation journal.
1.2 Show how the journal entry would be recorded in the books of White Limited on 30
June 2022 in accordance with IAS 2. And also show pro forma consolidation journal
for the group.
Show how the pro forma journal entry/ies would be in the books of White Limited
Group as of 30 June 2022, assuming that White Limited did not recognise the write-
down to net realisable value in its individual records](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4186aca3-00db-446f-be92-73808f130208%2F061eb2c4-cc22-4609-8b4f-7c6189c50040%2F74udyvb_processed.jpeg&w=3840&q=75)
Transcribed Image Text:QUESTION 1
Black Limited sells inventory to its parent, White Limited at cost price plus 125% mark-up.
Closing inventories in the records of White Limited on 30 June 2022 amount to R157 500.
Net realisable value of inventory on hand in the books of While limited amounts to
R107 500 on 30 June 2022.
•
•
• Ignore tax implications
Required
1.3
1.1 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 White Limited's records, Unrealised profit from the
group's perspective and additional elimination of unrealised profit required through
pro forma consolidation journal.
1.2 Show how the journal entry would be recorded in the books of White Limited on 30
June 2022 in accordance with IAS 2. And also show pro forma consolidation journal
for the group.
Show how the pro forma journal entry/ies would be in the books of White Limited
Group as of 30 June 2022, assuming that White Limited did not recognise the write-
down to net realisable value in its individual records
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