Solution-How would consolidation adjustments affect the

How would consolidation adjustments affect the group

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Reference no: EM132795655

Hold Ltd has a subsidiary, Scold. Consolidation draft financial statements were initially prepared, but then the accountant spotted that Hold has sold goods (at a profit) to Scold during the reporting year (and half of these goods were still included in Scold's inventory at the reporting date). In addition, the accountant spotted that the individual financial statements of Hold include a balance due from Scold in Trade receivables, and Scold's individual financial statements include the same amount payable to in Trade Payables.

problem 1: Consolidation adjustments for the intra-company trading and intra-company balances were then made. How would these consolidation adjustments affect the Group's current ratio and EPS, compared to the draft financial statements produced before these items were identified?

Option 1: Group Current Ratio will increase; EPS will increase

Option 2: Group Current Ratio will increase; EPS will decrease

Option 3: Group Current Ratio will decrease; EPS will decrease

Option 4: Group Current Ratio will decrease ; EPS will increase

Reference no: EM132795655

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How would consolidation adjustments affect the group

Reference no: EM132795655

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