During the year ended 31 March 2020, Newcastle Plc (Newcastle) sold goods originally costing £35.8 million to its subsidiary London Ltd (London) for a sales price of £40.2 million. On 31 March 2020, 70% of these goods remained in the inventories of London. By 31 March 2020, London had paid £21.8 million of the invoices due for this inventory. Newcastle owns 80% of the ordinary share capital of London. What is the group’s share in the unrealized profit?
During the year ended 31 March 2020, Newcastle Plc (Newcastle) sold goods originally costing £35.8 million to its subsidiary London Ltd (London) for a sales price of £40.2 million. On 31 March 2020, 70% of these goods remained in the inventories of London. By 31 March 2020, London had paid £21.8 million of the invoices due for this inventory. Newcastle owns 80% of the ordinary share capital of London. What is the group’s share in the unrealized profit?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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During the year ended 31 March 2020, Newcastle Plc (Newcastle) sold goods
originally costing £35.8 million to its subsidiary London Ltd (London) for a sales price of £40.2 million. On 31 March 2020, 70% of these goods remained in the inventories of London. By 31 March 2020, London had paid £21.8 million of the invoices due for this inventory. Newcastle owns 80% of the ordinary share capital of London. What is the group’s share in the unrealized profit?
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