Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › FR bpp revision kit Need help on page 84 no 255
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- July 9, 2020 at 1:25 am #576377
Janvis Co owns 30% of McLintock Co. During the year to 31 December 20X4 McLintock Co sold $2 mm
of goods to Jarvis Co, of which 40% were still held in inventory by Jarvis at the year end. McLintoCK
applies a mark-up of 25% on all goods sold.What effect would the above transactions have on group inventory at 31 December 20X4?
Debit group inventory $48,000
Debit group inventory $160,000
Credit group inventory $48,000
No effect on group inventoryAnswer
No effect on group inventory
The transaction will be posted as:
Debit
Credit
Share of profit of associate
Investment in associate.
No effect on group inventoryAccording to the notes I copied from your lecture when associate sells to parent I should Dr group retained earnings and Cr group inventory.
July 11, 2020 at 9:29 am #576555Hi,
There is no specific treatment given in the accounting standard regarding associate PURPs and it seems that the adjustment that is now being posted is to DR Share or profit of associate CR Investment in associate, regardless of the direction of the sale.
Thanks
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