DFS Questions

james99

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

peugeot

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