Question
QUESTION 1 (50 marks) Black Limited sells inventory to its parent, White Limited at cost price plus 125% mark-up. Closing inventories in the records
QUESTION 1 (50 marks) Black Limited sells inventory to its parent, White Limited at cost price plus 125% mark-up. Closing inventories in the records of White Limited on 30 June 2022 amount to R157 500. Net realisable value of inventory on hand in the books of While limited amounts to R107 500 on 30 June 2022. Ignore tax implications Required 1.1 Clearly illustrate how write-down of inventory will be with regard to the above (15) information, showing inventory at selling price, value according to the group, net realisable value, write-down in White Limited's records, Unrealised profit from the group's perspective and additional elimination of unrealised profit required through pro forma consolidation journal. 1.2 Show how the journal entry would be recorded in the books of White Limited on 30 (10) June 2022 in accordance with IAS 2. And also show pro forma consolidation journal for the group. 1.3 Show how the pro forma journal entry/ies would be in the books of White Limited (10) Group as of 30 June 2022, assuming that White Limited did not recognise the write- down to net realisable value in its individual records
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