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Hi,
How do I account for this in the consolidated SOFP and consol P&L? The URP..
Cable, a public limited company, acquired 30% of the ordinary share capital of Baden at a cost of $14 million on 1 January 20X7. The share capital of Baden has not changed since acquisition when the retained earnings of Baden were $9 million.
During the year to 31 December 20X8, Baden ( associate) sold goods to Cable(parent comapny) to the value of $35 million. The inventory of Cable at 31 December 20X8 included goods purchased from Baden on which the company made a profit of $10 million. (Source D3 https://www.academia.edu/9680979/PAPER_P2_CORPORATE_REPORTING_QUESTIONS_AND_ANSWERS_UPDATED_FOR_REVISED_IFRS_3)
Do we reduced the retained earnings and inventory?
Is it like this for retained earnings figure in the conso?
Working: Retained earnings
Parents profit
(+) post acq profit
(-) URP ( 30% * profit)Hi,
We adjust for our share of the profit, so 30% of the $10 million. As the associate sold the goods to the group the entry in the group SFP is as follows:
DR Group retained earnings
CR InventoryIn the group SPL the associate sold the goods and so we adjust the associates profit in the share of profit of associate line.
Thanks
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