Class notes
FRK300
- Course
- Institution
Lecture notes of 6 pages for the course FRK300 at UP (NOTEA)
[Show more]
Seller
Followlexiclaasen
Content preview
lOMoARcPSD|8949379Group statements Chapter 5 NOTES
Financial accounting 300 (University of Pretoria)
StuDocu is not sponsored or endorsed by any college or university
Downloaded by Lexi Claasen (lexi.claasen13@gmail.com)
, lOMoARcPSD|8949379
Group statements Chapter 5
c NB Principle: Consolidated FS can only reflect transactions with 3rd parties outside the
group
c IFRS10.B86(c) requires that all intragroup balances, transactions, assets and liabilities are
fully eliminated on consolidation
Intragroup purchases/sales
c Full amount of intragroup purchases/sales = eliminated on consolidation
Consolidation journal:
Dr Revenue (P/L)
Cr Cost of sales (P/L) removes the purchases leg of the transaction
Unrealised profit in closing inventory
P sells inventory to S – inventory still on hand at Y/E
c The profit made be P cannot be recognised in the consolidated FS
c Profits relating to transactions between P and S are not realised
c When will unrealised profit realise?
o When sold to a 3rd party
Thus, any intragroup inventory still on hand at Y/E
= will result in unrealised profit
c Cannot be recognised in consolidated FS because it is not sold to 3rd parties
c Eliminate upon consolidation
NB! Inventory must be measured at the original cost price for the group in the consolidated
FS therefore, cost of intragroup inventory adjusted upon consolidation
Consolidation journal:
Dr Cost of sales (P/L) [á COS – â profit]
Cr Inventories (SFP) [â cost price of inventory]
Unrealised profit in opening inventory
When the next year is consolidated:
c The individual FS will not reflect the previous years’ consolidation adjustments
Downloaded by Lexi Claasen (lexi.claasen13@gmail.com)
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller lexiclaasen. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $7.56. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75057 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now