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If there is intra group purchases in consolidation we should deduct it with cost of sales?
And if there is for e.g : 50%left in inventory how do we calculate purp if we don’t have sales?
I explain both of these (with examples) in my free lectures.
Please do not expect me to type out my lectures again here 🙂
Intra-group purchases are subtracted from sales and from cost of sales when we consolidate.
For the PURP you will be always be given enough information to enable you to calculate the inventory (if any) remaining from intra-group sales.
In my exam I did not get sales and yet it was given how much inventory left
Only purchases was given
The intra-group purchases by one of the companies is the same as the intra-group sales by the other company.
So basically I have to calculate purp on intra group sales
No, that is not what I wrote.
You asked two things. One was whether intra-group purchases are subtracted from the cost of sales. In the consolidated SOPL they are subtracted and also the intra-group sales are subtracted from the total sales. The intra-group sales and purchases are always the same.
The other related to the PURP, and the PURP is calculated on the closing inventory of goods bought from the other group company. If there is no closing inventory then there is no PURP.
Again, have you watched all of my free lectures on consolidations?