H Limited a holding company made sales amounting to US$100,000/- to S Limited, it's subsidiary. S Limited still have 50% goods in stock.

Question

Explain how these figures will be reported in consolidated financial statement of H Limited and S Limited respectively.

Ismail Mamoojee · Answer

On Consolidation the profit that H made on the remaining inventory would be eliminated

FITAH MOHAMED · Answer

Sales value increase100,000

Balance of customers Increases100,000

Inventory decreases by100,000 - profit

The value of purchases increase100,000

Balance of Increases100,000 creditors

Inventory Increases bb50000

Sales value increase50,000 + profit