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Chapter 12

Example 12.4

Ralphy acquired 100% of BadaBing five years ago.

Ralphy sold goods to BadaBing at a mark-up on cost of 25% and, at the
reporting date, $80,000 of the inventory from these sales is still held by
BadaBing.

BadaBing had repaid all outstanding amounts as at the year-end.

Required:

(i) Show the adjustment required for the consolidated statement of
financial position as a result of the intra-group trading and note
which of the consolidation workings would be impacted

(ii) Repeat requirement (i) above, but treating the transaction as if
BadaBing had sold the goods to Ralphy.

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