Consolidation

This topic has 1 reply, 2 voices, and was last updated 6 years ago by P2-D2.

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August 17, 2019 at 10:23 am #527846
saurabhnaik7
Participant
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When parent sells goods to subsidiary, why post acquisition PUP on inventory is not reduced from post acquisition profit of subsidiary in WN2 as it is from WN5? Doesn’t the closing stock of subsidiary being higher reduce the cost of sales increasing profits?
August 18, 2019 at 7:13 am #527916
P2-D2
Keymaster
- Topics: 4
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Hi,

If the parent sells the goods then the parent has made the profit, hence the adjustment is made in their books to remove the profit on goods unsold at the reporting date.

Thanks
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