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Hello Sir
There is a question in bpp study text page number 433 in which s co sold goods to p co for cost + markup but in solution they have subtracted unrealized profit from p instead of s and here is my follow up question
retained earning after acqisition is 12000 and p has 75 percent share we will deduct unrealized profit after taking 75% of 12000 or first we will deduct unrealised profit from 12000 then take 75% of it and if later is the case then balance sheet is not matchingthankyou
I do not have the BPP Study Text (only the Revision Kit).
The unrealised profit in inventory is subtracted from the retained earnings of the company that originally sold the goods to the other company (because it is the company that originally sold the goods that will have recorded the profit).
This is all explained in my free lecture on consolidations. The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.
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