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July 29, 2020 at 12:07 pm
Hello sir why are we deducting 1200 profit from value of total inventory (13000+7000-1200). At 22:39 minutes. Thank You .
John Moffat says
July 29, 2020 at 4:06 pm
It is the PURP – the unrealised profit on goods that were sold from S to P that the question says are left in inventory, so that the inventory is valued at the cost to the group. I do explain this earlier in this lecture.
May 5, 2020 at 7:30 pm
Hello sir, I have watched your lecture but I’ve got a question regarding the PURP: 1- If the seller is the parent so the PURP must be deducted from the Retain Earnings of the parent. 2- If the seller is the subsidiary then the PURP must be deducted from the Retain earnings of the Subsidiary and does not affect the retain earning of the parent. 3- The final adjustment is that we have to deduct the Inventory at cost: (Inventory less PURP) on consolidated SOFP. . Are the statements above are true and work for any Inter-Group Trading question??
May 6, 2020 at 7:46 am
1 & 2 are correct.
However to deal with the PURP in the SOPL, we add it to the cost of sales (which reduces the profit of the group).
May 4, 2020 at 7:10 pm
Hi John,a doubt regarding the deduction of the unrealised profit in the consolidated statements.Since the goods are sold on credit between P and S why are we deducting unrealised profit when there was no exchange of any money against the goods between the two companies.It was mere change in the ownership of the goods.
May 5, 2020 at 9:00 am
Sales are recorded when the sale is made – not when the cash is received. If P sells to S then P will have recorded the sale in their own accounts and will therefore have recorded the profit. P has made the profit, but if any of the goods were not sold externally then the profit on them needs removing in the consolidated accounts.
April 5, 2020 at 3:14 pm
thank you for all your lectures. I just have a question. If a company is a Group e.g Sunshine Group ¨PLC will the financial statements be prepared same as in these chapters of GROUP ACCOUNTS
I would really appreciate your response,
April 5, 2020 at 3:34 pm
The individual companies are not groups and prepare their own accounts in the normal way. If the companies are a group then they are required to also prepare group (or consolidated) accounts and this is explained in my free lectures on group accounts.
December 26, 2019 at 10:10 am
Hii John If we are deducting the profit of transfering goods from the selling company ,why not it adding back to the profit of purchasing company?.
August 31, 2019 at 11:13 pm
How to deal with the current accounts if it appears in the question?
September 1, 2019 at 10:19 am
It is explained in the next lecture!!
November 9, 2019 at 1:48 am
1. If the subsidiary sells goods the purp is deducted from retained earning at reporting date??
2. If the parent is the seller then the retained earning at acquisition is deducted from retained earning at reporting date?
November 9, 2019 at 7:56 am
Neither statement is correct as you have typed them. How we deal with the PURP is explained in detail in the lectures.
April 8, 2019 at 1:54 pm
Thank you very much for your help… do you have any material on level 6 financial reporting theory and practice?
April 9, 2019 at 10:23 am
Sorry but we only have material for the ACCA and CIMA qualifications.
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