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The statement of profit or loss for PQ, ST and AB for the year ended 31 December 20X0 are shown below:
1. PQ acquired 80% of its subsidiary, ST, on 1 January 20X0 and 40% of its associate, AB, on 1 September 20X0.
2. Since acquistion PQ has sold goods to ST and AB for $20,000 and $30,000 respectively. At the year end both ST and AB have 50% of these goods remaining in inventory. PQ uses a mark-up of 20% on all of its sales.
3. Since acquisition the goodwill in respect of ST has been impaired by $8,000 and the investment in AB has been impaired by $2,000.
4. PQ uses the fair value method for non-controlling interest at acquisition.
What is the revenue figure to be included in PQ's consolidated statement of profit or loss for the year ended 31 December 20X0?
Suggested Answer: C
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33 comments · newest first
LO
Louvenia
11 months ago
Totally agree, the fair value method is crucial for NCI!
JE
Jess
11 months ago
$476,000 seems too specific, is that really the right answer?
DE
Dean
11 months ago
Wait, how does the impairment impact the revenue figure?
SH
Shawnta
12 months ago
I think the mark-up affects the revenue calculation!
RU
Rueben
12 months ago
PQ sold goods worth $20,000 to ST and $30,000 to AB.
CL
Clorinda
1 year ago
I think the total revenue should include all sales made by PQ, but we have to subtract the unrealized profit from the inventory left with ST and AB. I hope I remember the calculations correctly!
MI
Miles
1 year ago
I feel a bit confused about the mark-up percentage. Is it applied to the total sales or just the portion that remains in inventory?
AR
Arminda
1 year ago
This question seems similar to the practice questions where we had to account for non-controlling interests and impairments. I think we need to add back the unrealized profit from ST and AB.
FR
Freeman
1 year ago
I remember we discussed how to adjust revenue for intercompany sales, but I'm not sure how to calculate the impact of the remaining inventory.
ME
Melodie
1 year ago
This seems straightforward enough, but I'll double-check my work to ensure I haven't missed any critical steps.
AN
Antonette
1 year ago
The impairment of goodwill and investment in associate is an important detail I'll need to incorporate into my calculations.
LE
Lemuel
1 year ago
Okay, I think I've got a handle on this. I just need to calculate the revenue figures and make the necessary adjustments for the intercompany sales and inventory.
MO
Mollie
1 year ago
This looks like a consolidation question, so I'll need to carefully consider the intercompany transactions and adjustments to the financial statements.
KR
Kristin
1 year ago
I'm a bit confused by the different acquisition dates and ownership percentages. I'll need to make sure I properly account for the non-controlling interests.
BE
Beata
1 year ago
I think I've got a good handle on this topic, so I'll start by carefully reading through the options and considering which ones are correct.
CA
Carmelina
2 years ago
Ah, the joys of consolidation. I feel like I'm doing a Sudoku puzzle here!
WE
Wenona
2 years ago
I'm pretty sure the answer is C. $480,000 just seems more logical to me.
GL
Gladys
2 years ago
I agree with you, I also believe the answer is B.
MA
Makeda
2 years ago
I think the answer is B. $440,000 makes more sense to me.
AI
Aimee
2 years ago
I think the correct answer is $450,000. The mark-up on sales should be added to the revenue figure.
EV
Evelynn
2 years ago
I'm not sure, I think it might be $440,000. The mark-up on sales needs to be considered.
JO
Jose
2 years ago
Wait, what? This question is giving me a headache. Can we get a calculator and some coffee over here?
PA
Patria
2 years ago
I agree, let's start by calculating the sales to ST and AB and applying the mark-up. Then we can work on the consolidated revenue figure.
LI
Lizbeth
2 years ago
Don't worry, let's break it down. First, we need to calculate the revenue figure for PQ's consolidated statement.
JE
Jesusa
2 years ago
Ooh, I bet it's D. $476,000 sounds about right after all the adjustments.
WI
Willow
2 years ago
User 2
LE
Lettie
2 years ago
User 1
JO
Jolene
2 years ago
I agree with you, Thurman. The sales to ST and AB should be included in the revenue figure.
TH
Thurman
2 years ago
I think the revenue figure should be $450,000.
DA
Danica
2 years ago
Hmm, this is tricky. We need to figure out the revenue figure after considering the intercompany transactions and impairments.
CH
Chauncey
2 years ago
So, the correct answer is B) $440,000.
CE
Cecil
2 years ago
The revenue figure to be included in PQ's consolidated statement of profit or loss for the year ended 31 December 20X0 is $440,000 (Option B).
DE
Denny
2 years ago
We need to calculate the revenue figure after considering the intercompany transactions and impairments.