Question
Assume that on February 20, 2014 (the last day of Tesco's half-year reporting period ending on February 21, 2014), Tesco received 200 million in prepayments
Assume that on February 20, 2014 (the last day of Tesco's half-year reporting period ending on February 21, 2014), Tesco received 200 million in prepayments from Unilever under the expectation that Tesco will purchase a certain volume of products over the next three years. Further, assume that during the following six months Tesco purchased 500 millionearning 50 million of the prepaymentin products from Unilever, out of which it sold 50% for 250 million. How would Tesco account for these transactions for its fiscal report ending on February 21 and on August 23, 2014?
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