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Hi,
I’m a little bit confused about the way the PUP (resulting from transactions between the parent and associate) should be adjusted in consolidated statements. In the BPP FR study text (p.182 example 3.7) it’s written that no matter who’s the seller the entry is always the same: DR Share of profit of associate (CSPL) CR Investment in associate (CSFP). The same conclusion is in q. 243 BPP Practice and Revision Kit (Jarvis and McLintock) where associate sells to parent – question asks what would such transaction have on group inventory and the answer is “no effect on group inventory”.
In your lecture on PUP when dealing with associates you expressly clarify that when associate sells to parent the entry includes crediting group inventory..
May it be that there is a simplification in the FR study materials?
ThanksHi,
Yes, I’ve seen that in the materials and don’t particularly agree with it but it that is what they are going with then I’ll update the notes/videos in due course.
Thanks
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