- This topic has 4 replies, 3 voices, and was last updated 7 years ago by
.
- Posts
Sales from associate to parent will not increase the Cost of sales in the consolidated SOPL right ?
Likewise when Parent sells to associate,
when calculating the share of profit in associate for the SOPL, we dont have to deduct the unrealised profit on the sales right.
Calculate the FULL pup on the sale, and
Deduct the FULL pup from the associate’s retained earnings, and
Apply the parent’s percentage to the adjusted associate retained earnings to calculate the amount to include in the consolidated statement of profit or loss
And it doesn’t make any difference whether the sale is from associate to parent or from parent to associate …. it’s the same process
This differs slightly from BPP / Kaplan treatments where their method results in slightly different values for retained earnings and investment in associate
Don’t worry about it!
hello Mr
i also confuse this
if i deduct purp from inventory and investment in associate in SOFP i did it twice, what must i do?
Deduct the full pup from the associate’s retained earnings for the year
Then take the parent’s percentage of those retained earnings into the consolidated statement of profit or loss
As a consequence of reducing the associate’s retained earnings for this year, the parent’s figure for “Investment in Associate” will be reduced by the parent’s share of the associate’s retained earnings (parent’s figure for investment in associate is calculated as “Cost of acquisition + parent’s share of associate’s post-acquisition retained earnings – amounts written off by way of impairment”)
So, in effect, the double entry for adjusting for the pup arising from a transaction with the associate is:
Dr consolidated retained earnings
Cr Investment in associateIs that any clearer?
- The topic ‘Sells from associate to parent’ is closed to new replies.