Page 328 - F3 -FA Integrated Workbook STUDENT 2018-19
P. 328

Chapter 21









                   Example 2d




                   Extract from Hide and Seek example:

                   (iii)  During the year ended 31 December 20X5, Hide sold goods to Seek for
                         $25,000 making a gross profit margin on the sale of 30%. At the
                         reporting date, one third of these goods remained unsold in the
                         inventories of Seek.

                   Required:


                   Calculate the adjustment required for the unrealised profit for inclusion
                   in the consolidated statement of financial position as at 31 December
                   20X5 and complete the group retained earnings working (W5).

                   Solution

                                                                                %age            $

                   Initial cost of goods
                   Profit element

                                                                              –––––          –––––
                   Sale price of goods

                                                                              –––––          –––––
                   Unrealised profit on proportion of goods unsold at the reporting date:




























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