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hello,
plz tell me why we deduct purp from cost of sales …….as we alredy deduct selling price fron cost of sales and revenue ????? plz tell me with exampleeeeWE DON’T!!!!!
We add it to cost of sales
The deduction from revenue and from cost of sales of the selling price of the intra-group traded goods is to adjust for the fact that “you cannot sell goods to yourself”
The addition of the pup to cost of sales is because the closing inventory of the company holding the goods is over-valued so far as the group is concerned. When we reduce that inventory by the amount it is over-valued ie the pup, the effect is to increase cost of sales.
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