What adjustments would be necessary as a result

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Reference no: EM133475037

Question

Company A has two subsidiaries, S1 and S2, and two associates, AS1 and AS2.

Company A has ownership interests in the subsidiaries and associates as follows:

S1	100 Percent Owned
S2	70 Percent Owned
AS1	30 Percent Owned
AS2	20 Percent Owned

The following inter-entity transaction took place:

AS1 sold goods to S1 at a profit of $20000. 60 percent of this profit is unrealised by the end of the year.
AS1 sold goods to S2 at a profit of $20000. 60 percent of this profit is unrealised by the end of the year.
AS1 sold goods to AS2 at a profit of $20000. 60 percent of this profit is unrealised by the end of the year.
AS1 sold goods to Company A at a profit of $20000. 60 percent of this profit is unrealised by the end of the year.

Required:

In determining the investor's share of the associates' profits, what adjustments would be necessary as a result of these transactions? (Consider each of these transactions as independent, and ignore taxes).

Reference no: EM133475037

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