Fromage purchased 80% of the equity shares in Frais on 1 January 20X1. During the year ended 31December 20X1, Fromage sold inventory to Frais at a sales price of £50,000. None of the goods remainedin Frais' inventory. Fromage applied a margin of 20%.Extracts from the statement of profit or loss for the two entities are shown below:FromageFrais£000£000Revenue1,000750Cost of sales(650)(250)What would be the revenue and cost of sales figures reported in the consolidated statement ofprofit or loss for the year ended 31 December 20X1?Answer to the nearest £000a.Revenue 1700 Cost of sales 850O b. Revenue 1750 Cost of sales 910O c. Revenue 1700 Cost of sales 860d. None of these options are correctRevenue 1550 Cost of sales 800

Consolidated Sales Revenue = Parents Co Revenue + Subsidiary Co Revenue - Intra group Sale…

Answered: uity shares in Frais on 1 January 20X1.…

uity shares in Frais on 1 January 20X1. During entory to Frais at a sales price of £50,000. None d a margin of 20%. ofit or loss for the two entities are shown below Frais £000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

Fromage purchased 80% of the equity shares in Frais on 1 January 20X1. During the year ended 31
December 20X1, Fromage sold inventory to Frais at a sales price of £50,000. None of the goods remained
in Frais' inventory. Fromage applied a margin of 20%.
Extracts from the statement of profit or loss for the two entities are shown below:
Fromage
Frais
£000
£000
Revenue
1,000
750
Cost of sales
(650)
(250)
What would be the revenue and cost of sales figures reported in the consolidated statement of
profit or loss for the year ended 31 December 20X1?
Answer to the nearest £000
a.
Revenue 1700 Cost of sales 850
O b. Revenue 1750 Cost of sales 910
O c. Revenue 1700 Cost of sales 860
d. None of these options are correct
Revenue 1550 Cost of sales 800

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