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Is contingent consideration also recorder at present value and be unwounded to its final value?
Moreover, with respect to PUP, why do we debit COS instead of Revenue? Shouln’t we decrease revenue by the unrleaised profit, therefor debiting revenue?
eliaslinus wrote:Is contingent consideration also recorder at present value and be unwounded to its final value?
Yes, it is recorded at fair value which will be its present value. In the exam we only ever have to discount the final payment to be made by a year or two, so nothing complicated.
eliaslinus wrote:Moreover, with respect to PUP, why do we debit COS instead of Revenue? Shouln’t we decrease revenue by the unrleaised profit, therefor debiting revenue?
The profit is in the inventory that has been sold. The adjustment to cost of sales is effectively adjusting the closing inventory figure in the CSPL with he other side being to inventory on CSFP.
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