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Associate PUP

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Associate PUP

  • This topic has 4 replies, 2 voices, and was last updated 1 year ago by alawi sayed.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • July 25, 2021 at 12:57 pm #629373
    alawi sayed
    Participant
    • Topics: 154
    • Replies: 168
    • ☆☆☆

    Hello Sir,

    Why in the following question of associate they recognized the pup even though it is telling that all the goods transferred had been sold ,so why we have to deduct the pup,

    Thanks,

    ——————————————————————————————————————————

    Green is an associate undertaking of Purple. Purple owns 30% of the sharesin Green, and has
    done so for many years.
    During the year ended 31 December 20X4, Green made a net profit of $1.5 million Green sold
    goods to Purple during the year with a value of $2 million, and half are still in Purple’s
    inventories at year end All the goods were sold at a margin of 30%.
    Purple has recognised previous impairments in relation to its investment in Green of
    $225,000 In the current year, Purple wishes to recognise an additional impairment charge of
    $35,000.
    What is the share of profit of associate to be shown in Purple’s consolidated statement of
    profit or loss?
    $____________ ,000

    Answer
    $325,000
    $
    Share of Net Profit: 30% × 1,500,000 450,000
    Share of PUP: 30% × ((2m × 50%) × 30%) (90,000)
    Current year impairment (35,000)
    Total 325,000

    July 28, 2021 at 10:32 pm #629714
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6473
    • ☆☆☆☆☆

    Hi,

    Read the question carefully. It says half the goods are still in inventory, so will not have been sold.

    Thanks.

    July 29, 2021 at 12:10 pm #629777
    alawi sayed
    Participant
    • Topics: 154
    • Replies: 168
    • ☆☆☆

    Hello Sir,

    Yes it is telling like that but what about the next sentence which says (at year end All the goods were sold at a margin of 30% )

    little bit confusing ,

    Thanks,

    August 1, 2021 at 9:39 am #630007
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6473
    • ☆☆☆☆☆

    That bit is just telling you that the goods were sold between the group members at the margin of 30%.

    August 16, 2021 at 12:12 pm #631728
    alawi sayed
    Participant
    • Topics: 154
    • Replies: 168
    • ☆☆☆

    Thanks

  • Author
    Posts
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