Parent owns 80% of Subsidiary. During the current accounting period, Subsidiary sold goods to Parent...
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Accounting
Parent owns 80% of Subsidiary. During the current accounting period, Subsidiary sold goods to Parent for $18,000 which gave Subsidiary a profit of $6,000. At the end of the reporting period, half of these goods are included in Parents inventory.
At the end of the reporting period, Parent accounts showed retained profits of $100,000, and Subsidiary accounts showed net assets of $75,000, including retained profits of $65,000. Subsidiary had retained profits of $20,000 at acquisition.
Required:
Show the adjustment to eliminate unrealised profits in the consolidation workings for Parent.
(Show workings)
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