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  3. p ltd owns 75% of the ordinary shares of s ltd (a

P Ltd owns 75% of the ordinary shares of S Ltd (a subsidiary). The sales,...

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Question

Accounting

P Ltd owns 75% of the ordinary shares of S Ltd (a subsidiary). The sales, cost of sales and gross profit of the two companies are as follows:
P Ltd S Ltd
'000'000
Sales 8,0003,000
Cost of sales (5,000)(2,000)
Gross profit 3,0001,000
During the year P Ltd sold goods to S Ltd for 1,200,000 and one-fourth of these goods remain unsold with S Ltd by the year-end. P Ltd invoices goods to S Ltd at a mark-up of 20%.
The consolidated gross profit equals to:
Question 6Answer
a.
4,060,000
b.
3,950,000
c.
4,050,000
d.
3,800,000

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