P Co acquired 60% of S Co on 1 January 20X7. The following extract has been taken from the individual statements of profit or loss for the year ended 31 March 20X7:

P Co S Co

RM’000 RM’000

Cost of sales 710 480

P Co consistently made sales of RM20,000 per month to S Co throughout the year. At the year-end, S Co held RM20,000 of this in inventory. P Co made a mark-up on the cost of 25% on all sales to S Co.

Required:

What is P Co’s consolidated cost of sales for the year ended 31 March 20X7?

b) P Co acquired 80% of S Co on 1 October 20X5. At this date, some of S Co’s inventory had a carrying amount of RM600,000 but a fair value of RM800,000. By 31 December 20X5, 70% of this inventory had been sold by S Co.

The individual statements of financial position on 31 December 20X5 for both companies show the following:

P Co S Co

RM’000 RM’000

Inventories 3,250 1,940

Required:

What will be the total inventories figure in the consolidated statement of financial position of P Co as of 31 December 20X5?

Answer rating: 100% (QA)

Answer Solution A P co acquired 60 of S co on 01012017 Co... View the full answer