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Dear Sir,
I hope you are doing well. I would like to ask you about something regarding inter equity in consolidation. Suppose Parent sold to subsidiary,In SOFP: we take (retained earnings of parent – unrealised profit) + subsidiary’s retained earnings (NCI % IF ANY) right? and for NCI, we don’t have to substract the unrealised profit right?
In SOPL: what we do? we doesn’t substract the unrealised profit under NCI and what do we do more, I mean where should we remove that unrealised profit in case P sold to S under SOPL?
Thanking you in advance.
See if you can reply me ASAP because I have an assessment on Monday morning.‘inter equity’ means nothing!! You are referring to inter entity sales.
If the parent has sold the goods to the subsidiary, then the unrealised profit is subtracted from the retained earnings of the parent.
In the SOPL we increase the cost of sales by the unrealised profit.
Have you watched my free lectures on this? The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well 🙂
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