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Dear tutors,
I have one problem with this question:
During the period from 1 January 20X7 to 1 September 20X7, Perkins Co sold $1m of goods to Swanson Co at a margin of 30%. Swanson Co had sold all of these goods on to third parties by 1 September 20X7.
In the BPP book, the answer is like this:
Cost of sales (23,980 – 4,400 (6600 * 8/12)) (19580)
Why don’t they add back the COS 700 for this?I am looking forward to receiving your answer.
Thanks a lot.Hi,
As all of the goods have been sold by the reporting date the profit on them has been realised and therefore no PUP adjustment is required.
Thanks
Hi Tutor, same question for me.
Normally consolidated IS will be
Revenue – deduct intra-sales
COS – deduct intra-sales + PUP.if now PUP is 0, don’t we need to add back both intra-sales in Rev and COS?
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