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Hi
BPP Workbook Chapter 9 Activity 2 (p.227). Portus Co.
I dont understand why the upward revaluation of 1200 on PPE was not included in OCI. I would have thought OCI would be 2400 in solution?
Also, can you please explain why upward revaluation on the inventory has increased COS and decreased subs profit?
Thanks sir
Hi,
Sorry, but I’ve not got the materials that you mention so cannot give a definitive answer on this one.
Gains on PPE go through OCI when it is revalued to fair value but the adjustment that you mention could be a fair value increase on consolidation of the subsidiary. This is an adjustment to the net assets of the subsidiary on acquisition and there is no adjustment through OCI.
The increase to CoS reducing the profits makes sense as you are increasing an expense within the accounts. What does it specifically say with regards to the change in inventory valuation? Does it mention it being an adjustment to closing/opening inventory?
Thanks
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