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Hi,
I haven’t quite well understood this topic “PUP”. I have tried to read and go through many articles but still, some doubts doesn’t allow me to give an overall picture of this topic.
PUP is said to occur when the group companies and subsidiary trade with one another. Otherwise when the trade with third party is there then there is no PUP.
My question is let’s suppose subsidiary sells goods to its parent (any amount) and 30% of the goods are in parents inventory. So according to the above definition from above, PUP on 100% items/goods is to be considered but while preparing group accounts, we only have to take 30% of the items. Since all profits sold by a subsidiary to its parents has to be deducted hence why not 100%?
I do explain all of this in my free lectures – with example and with an explanation of the problem.
Please do watch the free lectures (they are a complete free course for Paper FA and cover everything needed to be able to pass the exam well).
If you are still unclear after watching the lectures then please do ask again 🙂
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