Associates (IAS 28) – PUPs – ACCA Financial Reporting (FR)
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Example 3 – PUP
TR owns 20% of the equity share capital of BF. During the year to 31 December 20X0 TR purchased goods with a sales value of $200,000 from BF. One half of these goods remained in inventories at the year end 31 December 20X0. BF includes a mark-up of 25% on all sales.
Which of the following accounting adjustments would TR process in the preparation of its consolidated financial statements in relation to these goods?
A DR Group retained earnings (W5) $20,000 CR Inventories $20,000
B DR Share of profit of associate $20,000 CR Investment in associate $20,000
C DR Group retained earnings (W5) $4,000 CR Inventories $4,000
D DR Share of profit of associate $4,000 CR Investment in associate $4,000
shouldn’t it be c since the associate is selling to the parents?
I agree. Would like to see some feedback from the tutor on this question. The answer seems to contradict this video.
Hi Sir,
In the lecture notes, the answer to example 3 is apparently D, meaning we credit investment in associates which I don’t understand as you have said that if the Associate sells to the Parent we credit group inventory at cost.
Please assist
Example 2 – Group SFP incl. associate (I’m doing this for revision)
The dates make no sense to me. Provided with FS’s dated as at 31/December/2020
In the notes to the question we have 01/01/2019 (2 years before reporting date) as sub acqu date
Also – 01/01/2014 referencing identifiable assets in Sub (6 years before reporting date)
On 01/06/2020 (6 months before reporting date) acquired 25% associate
Provided with details of assets as at 31/December/2019 (one year before reporting date)
Question required we prepare consolidated statements for 31/December/2019 (1 year before reporting date)
IS this question correct?
Hi Sir,
Practice question is not available neither in Notes nor in the lectures from videos.
Dear Tutors
In this video you mention the exercise we can practise on Associates. Where is it? It is not in the notes.
Regards
Hi
Where can I find the Associates question and answer please?
Sir please share some practice material for this