Consolidation fair value of inventory.

PPRADEESH6y ago

Hi. Im a bit confused here. At the date of aquisition Subsidiary's inventorys book value and fair value were $3 million and $3.6 m respectively.At the reporting date 10% of inventory was not sold. The answer from bpp book guides to deduct 540000(representing inventory sold post aquisition) from post aquisition retained earning. Can anyone explain me the logic or mechanism behind this. Thanks in advance.

NNadir5y ago#1

pradeesh1995 wrote:Hi. Im a bit confused here.<br>At the date of aquisition Subsidiary’s inventorys book value and fair value were $3 million and $3.6 m respectively.At the reporting date 10% of inventory was not sold.<br>The answer from bpp book guides to deduct 540000(representing inventory sold post aquisition) from post aquisition retained earning. Can anyone explain me the logic or mechanism behind this.

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