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Downstream – upstream transactions between associate and parent

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Downstream – upstream transactions between associate and parent

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  • February 23, 2020 at 1:20 pm #562824
    archi604
    Member
    • Topics: 14
    • Replies: 11
    • ☆

    Dear tutor,

    In your lectures, the following entries are indicated for the removal of unrealised profit.

    When parent sells to associate:
    Dr Group retained earnings
    Cr Investment in associate

    When associate sells to parent
    Dr Group RE/Share of profit of associate
    Cr. Group inventory

    However, in BPP and Kaplan books there is no difference between upstream and downstream transactions. The same following entry is indicated for both transactions.

    Dr Share of profit of associate
    Cr. Investment in associate.

    Which approach is correct?

    February 29, 2020 at 3:14 pm #563563
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7082
    • ☆☆☆☆☆

    I still think m approach is correct but I’d stick with the methods in the book.

    Thanks

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