Consolidation Adjustment/inventory

[hinanifaf]

AB LTD owns 705 controlling interest in another entity,and exerts significant influence over EF ltd,an entity in which it holds 30% of the ordinary share capital.During the financial year ended 30April 2010, CD ltd sold goods to AB LTD valued at 80 000.The cost of the goods to CD LTD was 60 000,however 25% of the goods remained in AB LTD'S inventory at 30 April 2010.The group policy is not to charge non-controlling interest with any unrealised profit.

What will be the consolidated reserve amount,
The inventory amount and the
investment in subsidiary.
Please assist
Many thanks

[Dard]

You have not given any retained earning of the companies
There will be NO investment in subsidiary in the Statement of Financial Position. Instead Goodwill will be calculated
Total profit is 20,000, out of which 25% is unrealised, i.e 5000
Dr CD's Retained Earnings 3750
Dr Non-controlling interest 1250
Cr consolidated Inventory 5000
Therefore Decrease Retained Earnings by 3750, decrease NCI by 1250 and decrease inventory by 5000

[hinanifaf]

Many thanks
Originally posted by Dard
You have not given any retained earning of the companies
There will be NO investment in subsidiary in the Statement of Financial Position. Instead Goodwill will be calculated
Total profit is 20,000, out of which 25% is unrealised, i.e 5000
Dr CD's Retained Earnings 3750
Dr Non-controlling interest 1250
Cr consolidated Inventory 5000
Therefore Decrease Retained Earnings by 3750, decrease NCI by 1250 and decrease inventory by 5000