Company A has two subsidiaries, S1 and S2, and two associates, AS1 and AS2. Company A has ownership interests in the subsidiaries and associates as follows:

S1	100 Percent Owned
S2	70 Percent Owned
AS1	30 Percent Owned
AS2	20 Percent Owned

The following inter-entity transaction took place:

AS1 sold goods to S1 at a profit of $20000. 60 percent of this profit is unrealised by the end of the year.

AS1 sold goods to S2 at a profit of $20000. 60 percent of this profit is unrealised by the end of the year.

AS1 sold goods to AS2 at a profit of $20000. 60 percent of this profit is unrealised by the end of the year.

AS1 sold goods to Company A at a profit of $20000. 60 percent of this profit is unrealised by the end of the year.

Required:

In determining the investor's share of the associates' profit, what adjustments would be necessary as a result of these transactions? (Consider each of these transactions as independent and ignore taxes).

Answer rating: 100% (QA)

To determine the investors share of the associates profit in each of the given transactions we need to make adjustments based on the ownership interes... View the full answer