B407F week 5 (student)-1

B407F week 5 (student)-1 - Adjust unrealized profits in NCI...

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1 Intra group Trading When the parent trades with a subsidiary, the parent’s statement of financial position shows and asset/liability, and an equal, but opposite, asset/liability is shown in the statement of financial position of the subsidiary. On consolidation, these always cancel out each other. Illustration 8 Inter –group profit: 270m x 50/150 = 90 Unrealized profit: 90m x 1/3 = 30
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A B Profit $30m (downstream ) Extra $30m in closing inventory 75% B to A (upstream)
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Unformatted text preview: Adjust unrealized profits in NCI Illustration 8 Think. What happen next year for the unrealized profits in inventory (opening inventory)? Debit ($m) Credit ($m) Retained profits 30 Cost of sales (opening inventory) 30 4 Tax base of an asset Assets: carrying amount > tax base 200 Taxable Temporary difference No entry Debit asset 200 Credit investment in B 200 40 Deferred Tax Liability (20%) Tax Base 200 Carrying amount of asset...
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B407F week 5 (student)-1 - Adjust unrealized profits in NCI...

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