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when an inter-company purchase takes part:
when the subs sell to parent we subtract the PURP from the inventory and the post acquisition assets.
And when the parent sells to subsidiary we subtract the PURP from the inventory and the group retained earnings.
Am I right or I have misunderstood something?
Not quite right.
Always we subtract the PURP from the inventory.
In addition we also subtract it from the retained earnings of whichever company initially sold it to the other company.
(I think maybe you just made a typing error – you wrote that when the subs sells to the parent you subtract from the post-acquisition assets. What you should have written is that we subtract it from the post-acquisition retained earnings 🙂 )
You final sentence about when the parent sells to the subsidiary is effectively correct.
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