Unit 11 - Grp Rep - Consol Fin Stat

G s ltd sold goods to h ltd cancel out of intra group

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Unformatted text preview: nts) e.g. H Ltd purchased goods from S Ltd H Ltd Cr Current a/c with S Ltd (creditor a/c) e.g. S Ltd sold goods to H Ltd Cancel out of intra-group indebtedness S Ltd Dr current a/c with H Ltd (debtor a/c) In general, these two current accounts should equal to each other. However, discrepancies may happen if there are some transactions that have not been recorded by one of the parties e.g. cash in transit or goods in transit etc. 25 Example 2 • H Ltd acquired 80% of the shares in S Ltd on 1 January 20X0 when the retained profits of S Ltd were $400,000. • H Ltd and S Ltd declared final dividends of $1M and $400K respectively on 31 December 20X2. • At the year end, there are items in transit: – Goods, from H Ltd to S Ltd : $300,000 – Cash, from S Ltd to H Ltd : $100,000 • Goodwill is impaired by the amount of $110,000. 26 Example 2 The statements of F/P of H Ltd and S Ltd at 31 December 20X2 are as shown below: H Ltd S Ltd $000 Non-current assets Investment in S Ltd Current assets Current account with S Ltd Less: Current liabilities Creditors Current account with H Ltd Share capital @$1 Retained profits Proposed final dividends $000 9,000 2,100 3,000 1,300 15,400 2,800 1,800 4,600 (1,200) _____14,200 10,000 3,200 1,000 1...
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This document was uploaded on 04/03/2014.

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