Downstream – upstream transactions between associate and parent

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

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February 23, 2020 at 1:20 pm #562824
archi604
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- Topics: 14
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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
Member
- Topics: 4
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I still think m approach is correct but I’d stick with the methods in the book.
Thanks
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