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Sales and Repurchases

Sales and Repurchases. 4(b)( i ) (legal form) Wardle Income statement For the year end 31 Mar 2010 31 Mar 2012 Sales                           6m 10m Cost of sales              7m 5m 6m 7,986

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Sales and Repurchases

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  1. Sales and Repurchases • 4(b)(i) (legal form) • Wardle • Income statement • For the year end • 31 Mar 2010 31 Mar 2012 • Sales                          6m 10m • Cost of sales             7m5m6m 7,986 • Cross profit              (1m) 1m   4m 2,014 • Interest expense        0 1.986m • (Partial) Net income before tax      

  2. Sales and Repurchases • B(ii)Wardle (substance) option 2: • Income statement • For the year end • 31 Mar 2010 2011 31 Mar 2012 • Sales           6m 0m 0m10m • Cost of sales    5m 0m 0m7.986m 5m • Gross profit      1m 0m5m • Interest exp0.6m 0.66m 0.726m

  3. Inventory risk Selling price Cashier Service & space C 100% $100 Sales 100 Cost of sales Expenses 20 NFL 80% $80 Department Store 20% $20 1 C Sales Cost of sales Sales Cost of sales Distributor NFL 2 Transfer the risk and rewards

  4. NFL Option 1: Bossini Z warehouse (product store here) FS: Sales to bossini customer Cost of sales Bossini Z warehouse (sell to Z warehouse by bossini) Option 2: FS: Sales to z Cost of sales FS: Sales Cost of sales from Bossini

  5. NFL Option 1: Bossini NFL Z warehouse Department store (product store here) FS: Sales to bossini customer Cost of sales Bossini NFL Z warehouse (sell to Z warehouse by bossini) Option 2: FS: Sales to z Cost of sales FS: Sales Cost of sales from Bossini

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