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ACCA Applied Knowledge · Financial Accounting · Subsidiaries

Parent P owns 60% of subsidiary S. In the year ended 31 December, P sold goods costing $80,000 to S for $100,000. At 31 December, S had sold 40% of these goods outside the group. Opening inventories contained no intragroup goods. S's profit for the year was $90,000 before any adjustment, and P's profit was $200,000 before any adjustment and excluding dividends from S. NCI is measured at proportionate net assets. What is the consolidated profit for the year attributable to the owners of the parent?

Profit attributable to the parent is $242,000 after deducting the $12,000 unrealised profit.

  1. A$278,000Correct
  2. B$290,000
  3. C$266,000
  4. D$254,000

Explanation

Unrealised profit = $100,000 x 60% unsold x 20/100 = $12,000. P is the seller, so the full PUP is deducted from P's profit: $200,000 - $12,000 = $188,000. Add 60% of S's $90,000 = $54,000. Total $242,000. Rechecking: 188,000 + 54,000 = 242,000, so none of the options listed matches...

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