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.
Ask the Tutor ACCA FR
229 Perkins Co Mar Jun 2018
5y ago#1Hi,
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?
5y ago#3No, you need to be very careful. The intra-group sale is always eliminated regardless of whether there are good remaining in inventory at the reporting date.
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