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Associates and PUP in Profit or Loss

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Associates and PUP in Profit or Loss

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by MikeLittle.
Viewing 2 posts - 1 through 2 (of 2 total)
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    Posts
  • February 26, 2017 at 3:22 pm #374362
    Seetal
    Member
    • Topics: 1
    • Replies: 2
    • ☆

    I’ve been doing past papers and in the June 2014 paper I have come across the groups share of the Associates PUP being added to the cost of sales.

    I assumed that the PUP is removed from the group share of the associates profit rather than make adjustments to the group cost of sales.

    Could someone please clarify for me

    February 26, 2017 at 5:13 pm #374390
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23309
    • ☆☆☆☆☆

    If you were to reduce the Ventor post-acquisition profits by the full $3 million profit on the sale to Ventor, we would then take Penketh’s 30% of those reduced profits

    In that way we automatically have eliminated the group’s share of the unrealised profits that arose on that transaction with the associate and at the same time we reduce the value of the parent’s Investment in Associate from working W5A

    Other tuition providers take the pup to cost of sales (by decreasing group inventory which increases cost of sales and thereby reduces the profit for the year)

    I prefer to take the adjustment through the associate’s retained earnings

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Viewing 2 posts - 1 through 2 (of 2 total)
  • The topic ‘Associates and PUP in Profit or Loss’ is closed to new replies.

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