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Hi everybody, can somebody please explain to me why the differences in the results of calculation of provision for unrealized profit (pup) going by the approach adopted in the open tuition course notes as against bpp course material on the same topic. for instance example 6 of chapter 8 (bpp), and open-tuition course note example 3 of chapter 8.
Hi. the only difference should be in where to put the adjustment. There should be no difference in the calculation ( I’ve not got the BPP course material ). But sometimes ( and I believe BPP are inconsistent! ) BPP put the adjustment through the seller’s records and sometimes through the buyer’s.
The OT notes are consistent – always put the adjustment through the seller’s records – they are the ones who have recorded / recognised this unrealised profit.
The only exception is where an associate is involved. In the OT notes ( again consistent ) we ALWAYS put a pup through the associate’s records and it doesn’t matter whether the associate is a buyer or a seller.
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