[saadiy]

My confusion is even if the subsidiary sells the goods purchased from the parent outside the group how can the parent realize that profit after all that profit was made by selling to the subsidiary? For example if the parent sells goods to the subsidiary at a profit of $500 and the subsidiary sells them ahead at a profit of $700. How can the parent realize that 500 profit made as it was from selling to the subsidiary?

[saadiy]

I have a question. When a parent sells goods to a subsidiary we get unrealized profit. If then the subsidiary sells it to a third party we realize the profit. The question is why realize it? Because still the profit that was made by the parent was by selling to the subsidiary. It just does not seem logical. What I think is irrespective of the fact that the subsidiary has sold it to a third party or not it should still be unrealized. Clarify please.
Thanks.

[saadiy]

Absolutely perfect! Thank you so much!!!! This was really confusing me. You crystal cleared it to me
Thanks alot!!!!

[saadiy]

Because its the subsidiary’s shares after all.
So whatever the parent is investing in the subsidiary it aint going to the subsidiary at all?

[saadiy]

Umm we are buying the from the shareholders of the subsidiary

[saadiy]

Hi mike
One thing is really confusing me. Why do we include deffered consideration as a liability in sofp I mean why cant we set it off as it is a receivable for the subsidiary?
This is really confusing me.
Thanks.

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