Stevie Ltd owns 75% of Wright Ltd.During the year ended 30 June 20X1 Stevie Ltd reported total sales of $10 000 000 and Wright Ltd reported total sales of $15 000 000.$2 000 000 of Stevie Ltd's sales were sales to Wright Ltd.Wright has sold all the assets from these sales from Stevie Ltd to external parties during this year.What is the total sales reported in the consolidated profit or loss account for this year?
A)$23 000 000
B)$25 000 000
C)$17 250 000
D)$18 750 000

Question

Quizplus · Accepted Answer

In consolidated financial statements, intercompany transactions are eliminated. Therefore, the $2,000,000 sales from Stevie Ltd to Wright Ltd are eliminated from the total sales. The consolidated sales are thus $10,000,000 + $15,000,000 - $2,000,000 = $23,000,000.

Stevie Ltd Owns 75% of Wright Ltd