A Ltd owns 100 per cent of B Ltd, which in turn owns 100 per cent of
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A Ltd owns 100 per cent of B Ltd, which in turn owns 100 per cent of C Ltd. During the financial year, A Ltd sells inventory to B Ltd at a sale price of $150 000. The inventory cost A Ltd $100 000 to produce. Within the same financial year, B Ltd subsequently sells the same inventory to C Ltd for $200 000 without incurring any additional costs. At the end of the financial year, C Ltd has sold half of this inventory to companies outside the group for a sale price of $180 000. At year end C Ltd still has half the stock on hand.
REQUIRED
From the economic entity’s perspective (that is, the group’s perspective), determine:
a. The sales revenue for the financial year
b. The value of closing inventory.
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