Question
Charlie purchased 90% of Naga many years ago. They trade regularly with each other. During the current year, Naga sold goods totalling 1,000,000 to Charlie.
Charlie purchased 90% of Naga many years ago. They trade regularly with each other. During the current year, Naga sold goods totalling 1,000,000 to Charlie. One half of the goods remained in inventory at the year end. The goods were all sold at a mark-up of 25%.
What is the required unrealising profit adjustment in the consolidated statement of financial position?
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Dr Retained earnings of Naga 100,000 and Cr Inventory in CSFP 100,000
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Dr Group retained earnings 100,000 and Cr Inventory in CSFP 100,000
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Dr Retained earnings of Naga 125,000 and Cr Inventory in CSFP 125,000
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Dr Group retained earnings 125,000 and Cr Inventory in CSFP 125,000
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