Question 13 Not yet answered Marked out of 2 Flag question Big owns 80% of the ordinary share capital of Little

Big owns 80% of the ordinary share capital of Little.

Big has sold goods to Little during the year at cost plus 20%. At the year end, the stocks of Little include goods supplied by Big for Euro 60,000.

This stock will be included in the consilidated finanacial statements of Big group at a value of

= Euro 60,000 / 1.2

= Euro 50,000

Note : we are using 1.2 because goods are sold at cost + 20% so 60,000 is actually 120% of cost and goods will be recorded at cost so to find that 60,000 will be divided by 1.2 or 120%.