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Hello,
I was wondering how to adjust for intercompany sales and PUP for mid-year acquisition.
For example if company A acquired 100% of the shares of company B on 01/07/2017 and publishes its consolidated accounts on 31/12/2017.
During the year, company B sold 100 000 CU to company A with a 25% margin and at the end of the year there remains 50% of those goods in A inventory.Should we deduct from the sales 50% of the intercompany sales and 50% of the PUP? (Since July 1st is at half year point)
Or something else?Thank you
Hi,
For the PUP there is no need to pro rate any of it as the profit will have arisen since the acquisition.
You may need to be careful with the i/co sale element that is removed from the group profit/loss as there may have been trading prior to the acquisition. If this is the case then you will only eliminate the sales made since the acquisition date, not those for the full year.
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