Financial Statements Help

Charlottec5779

Hi

I am just going through and revising for my Financial Statements exam in 2 weeks time and I have come across the below question which I struggling with!


"Beadnell Plc acquired 100% of the issued shared capital and voting rights of Catton Ltd on 20X0.

The consolidated cost of sales of Beadnell PLC and it's subsidiary undertaking for the year ended 31 December 20X0, before taking in to account any adjustments required in respect of the information below is £200, 000.

Additional Data

During the year Beadnell Plc sold goods which had cost £40, 000 to Catton Ltd for £50, 000 60% of these goods still remain in inventories at the end of the new year.

The consolidated cost of sales for the year ending 31 December 20X0 will be?"

I would be most grateful if anyone could shed some light on how to solve the above question. Any help would be would be appreciated.

Best Wishes
Charlotte

Rachetman

Hello there Charlotte.

What you need to consider when making adjustments to the consolidated cost of sales is you need to nullify inter-company transactions. So what would the adjusted consolidated cost of sales be?

Also, try out the Greenlight questions as they cover these kind of questions.

Nps

http://www.aat-interactive.org.uk/elearning/level4/Consolidated%20income%20statements.pdf

I think you'll find the attached very useful. It explains exactly how to answer your question. If you're still stuck after reading it, just let us know.