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DFS Questions

james99james99 Settling In NicelyRegistered Posts: 18
The First Question is the statement of recognised income & Expenses
Is this the same as the Statement of changes in equity?

The Second Question is
In a consolidated income statement
Below is an inter-group sale
During the year, Broadbent Ltd made sales totalling £600,000 to Charles Ltd. Broadbent achieves a mark-up of 25% on cost of all sales. One quarter of these goods remained in inventory at year end
How much is the provision for unrealised profit

Comments

  • peugeotpeugeot Experienced Mentor Registered Posts: 624
    The Statement of Changes in Equity is the International version of the Statement of total recognised gains and losses.

    With regard to the intra group sale:

    We have to work out what the cost to Broadbent is. We know they have sold the goods for £600,000 which has meant they have made 25% markup. The markup method means that 125% is the sales price, 25% is the profit and 100% is the cost. To work the cost out:

    £600,000 x 100/125 = £480,000. This is the cost to Broadbent. The intra group profit on the total sale is (£600,000 - £480,000) = £120,000.

    We are told that 1/4 of the goods remain in inventory at the end of the year.

    Therefore, the PURP adjustment is £120,000 * 1/4 = £30,000.

    Kind regards
    Steve
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