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When I say exciting, I mean as exciting as consolidation gets..
Company A sells stock (let's say 1 million cardboard boxes) to Company B
The sale is 1,000,000 cardboard boxes at 10p each = £100,000
Company B sells the cardboard boxes to Company C for 50p each, = £500,000
Company C now has a Balance Sheet of Assets £500,000, Bank Loan £500,000
Company A now takes over company C.
Company A is happy to take on the Bank Loan.
How will the consolidation work?
Obviously Company A cannot recognise an asset of £500,000 surely.
How does this cancel out?
Would it go against Reserves?
I'm looking up IFRS's to try find info, but if anyone knows anything it would be greatly appreciated!
Company A sells stock (let's say 1 million cardboard boxes) to Company B
The sale is 1,000,000 cardboard boxes at 10p each = £100,000
Company B sells the cardboard boxes to Company C for 50p each, = £500,000
Company C now has a Balance Sheet of Assets £500,000, Bank Loan £500,000
Company A now takes over company C.
Company A is happy to take on the Bank Loan.
How will the consolidation work?
Obviously Company A cannot recognise an asset of £500,000 surely.
How does this cancel out?
Would it go against Reserves?
I'm looking up IFRS's to try find info, but if anyone knows anything it would be greatly appreciated!