0 Patula Co acquired 80% of Sanka Co on 1 October 20X5. At this date, some of Sanka Co’s inventory had a carrying amount of $600,000 but a fair value of $800,000. By 31 December 20X5, 70% of this inventory had been sold by Sanka Co.
The individual statements of financial position at 31 December 20X5 for both companies show the following:
Patula Co Sanka Co
$’000 $’000
Inventories 3,250 1,940
What will be the total inventories figure in the consolidated statement of financial position of Patula Co as at 31 December 20X5?
3,250 + 1,940 + ((800 – 600) x 30%) = 5,250,000.