Black Limited sells inventory to its parent, White Limited at cost price plus 125% mark-up. • Closing inventories in the records of White Limited on 30 June 2022 amount to R157 500. Net realisable value of inventory on hand in the books of While limited amounts to R107 500 on 30 June 2022. • Ignore tax implications Required 1.1 Clearly illustrate how write-down of inventory will be with regard to the above information, showing inventory at selling price, value according to the group, net realisable value, write-down in White Limited's records, Unrealised profit from the group's perspective and additional elimination of unrealised profit required through pro forma consolidation journal. 1.2 Show how the journal entry would be recorded in the books of White Limited on 30 June 2022 in accordance with IAS 2. And also show pro forma consolidation journal for the group. 1.3 Show how the pro forma journal entry/ies would be in the books of White Limited Group as of 30 June 2022, assuming that White Limited did not recognise the write- down to net realisable value in its individual records

Black Limited sells inventory to its parent, White Limited at cost price plus 125% mark-up. • Closing inventories in the records of White Limited on 30 June 2022 amount to R157 500. Net realisable value of inventory on hand in the books of While limited amounts to R107 500 on 30 June 2022. • Ignore tax implications Required 1.1 Clearly illustrate how write-down of inventory will be with regard to the above information, showing inventory at selling price, value according to the group, net realisable value, write-down in White Limited's records, Unrealised profit from the group's perspective and additional elimination of unrealised profit required through pro forma consolidation journal. 1.2 Show how the journal entry would be recorded in the books of White Limited on 30 June 2022 in accordance with IAS 2. And also show pro forma consolidation journal for the group. 1.3 Show how the pro forma journal entry/ies would be in the books of White Limited Group as of 30 June 2022, assuming that White Limited did not recognise the write- down to net realisable value in its individual records

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

ChapterMJ: Mornin's Joe

Section: Chapter Questions

Problem 3IFRS

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LIFO Liquidation Profit Hammond Company adopted LIFO when it was formed on January 1, 2017. Since then, the company has had the following purchases and sales of its single inventory item: In December 2020, the controller realized that because of an unexpected increase in demand, the company had sold 22,000 units but had purchased only 19,000 units during the year. In 2020, each unit had been sold for 19, and each unit purchased had cost 10. The income tax rate is 21%. Required: 1. Next Level If Hammond makes no additional purchases in 2020, how much LIFO liquidation profit will it report? 2. Prepare the appropriate annual report disclosures for 2020. 3. Next Level if Hammond purchases an additional 7,000 units in December 2020, how much income tax will the company save? 4. Next Level If Hammond purchases the additional 7,000 units, how much income tax has the company saved over the 4-year period by using LIFO instead of the FIFO cost flow assumption?
Under U.S. GAAP, LIFO is an acceptable inventory method. Financial statement information for three companies that use LIFO follows. All table numbers are in millions of dollars. Assume these companies adopted IFRS, and thus were required to use FIFO, rather than LIFO. a. Prepare a table with the following columns: (1) Difference between FIFO and LIFO inventory valuation. (2) Revised IFRS net income using FIFO. (3) Difference between FIFO and LIFO inventory valuation as a percent of total current assets. (4) Revised IFRS net income as a percent of the reported net income. b. Complete the table for the three companies. c. For which company would a change to IFRS for inventory valuation have the largest percentage impact on total current assets (Col. 3)? d. For which company would a change to IFRS for inventory valuation have the largest percentage impact on net income (Col. 4)? e. Why might Kroger have a negative impact on net income from using LIFO, while the other two companies have a positive impact on net income from using LIFO?
Inventory Errors McLelland Inc. reported net income of $175,000 for 2019 and $210,000 for 2020. Early in 2020, McLelland discovers that the December 31, 2019 ending inventory was overstated by $20,000. For simplicity, ignore taxes. Required: 1. What is the correct net income for 2019? For 2020? 2. Assuming the error was not corrected, what is the effect on the balance sheet at December 31, 2019? At December 31, 2020?
B Limited sells inventory to its parent, W Limited at cost price plus 125% mark-up. • Closing inventories in the records of W Limited on 30 June 2022 amount to R157 500.• Net realisable value of inventory on hand in the books of W limited amounts to R107 500 on 30 June 2022. • Ignore tax implications Show how the pro forma journal entry/ies would be in the books of W Limited Group as of 30 June 2022, assuming that W Limited did not recognise the write down to net realisable value in its individual records
B Limited sells inventory to its parent, W Limited at cost price plus 125% mark-up. • Closing inventories in the records of W Limited on 30 June 2022 amount to R157 500.• Net realisable value of inventory on hand in the books of W limited amounts to R107 500 on 30 June 2022. • Ignore tax implications Clearly illustrate how write-down of inventory will be with regard to the above information, showing inventory at selling price, value according to the group, net realisable value, write-down in W Limited’s records, Unrealised profit from the group’s perspective and additional elimination of unrealised profit required through pro forma consolidation journal.
Bla Limited sells inventory to its parent, Whi Limited at cost price plus 125% mark-up. • Closing inventories in the records of Whi Limited on 30 June 2022 amount to R157 500. • Net realisable value of inventory on hand in the books of Whi limited amounts to R107 500 on 30 June 2022. Ignore tax implications Required:Clearly illustrate how write-down of inventory will be with regard to the above information, showing inventory at selling price, value according to the group, net realisable value, write-down in Whi Limited’s records, Unrealised profit from the group’s perspective and additional elimination of unrealised profit required through pro forma consolidation journal
B Limited sells inventory to its parent, W Limited at cost price plus 125% mark-up. • Closing inventories in the records of W Limited on 30 June 2022 amount to R157 500.• Net realisable value of inventory on hand in the books of W limited amounts to R107 500 on 30 June 2022. • Ignore tax implications Show how the journal entry would be recorded in the books of W Limited on 30 June 2022 in accordance with IAS 2. And also show pro forma consolidation journalfor the group.
Bla Limited sells inventory to its parent, Whi Limited at cost price plus 125% mark-up. • Closing inventories in the records of Whi Limited on 30 June 2022 amount to R157 500. • Net realisable value of inventory on hand in the books of Whi limited amounts to R107 500 on 30 June 2022. Ignore tax implications Required:Show how the journal entry would be recorded in the books of Whi Limited on 30 June 2022 in accordance with IAS 2. And also show pro forma consolidation journal for the group.
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Mustard Seed PLC adheres to IFRS. It recently purchased inventory for €100 million andspent €5 million for storage prior to selling the goods. Th e amount it charged to inventoryexpense (€ millions) was closest to:A. €95.B. €100.C. €105.
49-XYZ Company purchased Inventory on 1st January, 2018 worth OMR 10,000. The company decided to issue the inventory under LIF0 method. But in the year 2020 the company decided to change the method to FIFO as per the suggestion from Production Manager as a result of which the profit after tax of the company is declined by OMR 1,000. Name the variation in the profit due to change in the method of inventory valuation. O a. Inherent risk O b. Detection risk O c. Control risk O d. Audit Risk
Question: ClipRite sold ProForm inventory costing $72,000 during the last six months of 2020 for $120,000. At year-end, 30 percent remained ClipRite sold ProForm inventory costing $200,000 during 2021. At yearend, 1 percent is left. What are the consolidated balances? Proform acquired 70 percent of ClipRite on June 30, 2020, for $910,00 in cash. Based on ClipRites acquistion-date fair value, an unrecorded intangible of $400,000 was recognized and is being amortized at the rate of $10,000 per year. No goodwill was recognized in the acuisition. The noncontrolling interest fair value was assessed at $390,000 at the acquisition date. The 2021 financial statements are as follows: Proform ClipRite Sales -800,000 -600,000 Costs of goods sold 535,000 400,000 Operating expenses 100,000 100,000 Dividend Income -35,000 Net Income -200,000 -100,000 Retained earning, 1/1/21 -1,300,000 -850,000 Net Income -200,000 -100,000 Dividend declared 100,000…