Chpt 3 Intragrp Trading

Question 1

Cash in transit

Answer 1

Dr Cash ⬆️

Cr receivables ⬇️

Question 2

Goods in transit

Answer 2

Dr Inventories ⬆️

Cr Payables ⬆️

Question 3

Eliminate intragroup receivables and payables

Answer 3

Dr intragroup payable ⬇️

Cr intragroup receivable ⬇️

Question 4

Sale by Parent to subsidiary

Answer 4

Adj P’s books:
Dr Retained Earnings ⬇️
Cr Consolidated Inventories ⬇️

Question 5

Sale by Subsidiary to parent

Answer 5

Adj S’s books:
Dr Retained Earnings of S ⬇️
Car consolidated inventories ⬇️

Question 6

Transfer of PPE

Answer 6

Adj seller’s books (reduce value PPE):
Dr Retained Earnings ⬇️
Cr PPE ⬇️

By: profit sale x (remain life YE / remain life at date of sale)

Question 7

Cancel intra co loan

Answer 7

Dr loan payable ⬇️

Cr loan receivable ⬇️

Question 8

Cancel intra co interest payable

Answer 8

Dr Finance income ⬇️

Cr Finance cost ⬇️

Question 9

Mark up

Answer 9

On cost eg 20%
Sales 120
COS (100)
Profit 20

Question 10

Margin

Answer 10

On sales eg 20%
Sales 100
COS (80)
Profit 20