How would tesco account for these transactions

Assignment Help Accounting Basics

Reference no: EM132916878

Question

Tesco Case Study -Assume that on February 20thst (The last day of Tesco's half year reporting period ending on 21 February) 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 £450 million in products from Unilever, out of which it sold 50% of the inventory for £250 million. It also earned £50 million of the deferred income as a result of the above purchase.

How would Tesco account for these transactions for its fiscal report ending on February 21 and on August 23, 2014.

Reference no: EM132916878

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