ACCA · Question 47 · Preparing simple consolidated financial statements
Scenario: TechNova PLC acquired 80% of CyberNetix Ltd on 1 Jan 20X5 for $500,000 cash. At acquisition, CyberNetix's retained earnings were $200,000 and share capital was $100,000. NCI fair value at acquisition was $120,000. During 20X5, TechNova sold goods to CyberNetix for $80,000 (25% mark-up on cost). Half remained in inventory at year-end (31 Dec 20X5). CyberNetix's 20X5 profit was $150,000.
At year-end, CyberNetix still owes TechNova $20,000 for the goods purchased. How is this treated in the consolidated statement of financial position?
Answer options:
It is added to consolidated receivables
The $20,000 is eliminated from both consolidated receivables and consolidated payables
It is deducted from consolidated inventory
It is ignored
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