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Hi there,
I was wondering why in the pup mini exercises (page 190 on OT free notes) each pup adjustment is recorded in the books of the associate irrespective of which company made the sale. Even though the rule is clear (record the adjustment in the selling company’s books), what i get from the mini exercises answers is that this rule is not valid in the case of a sale between parent and an associate as opposed to a sale between a parent and a subsidiary.
What am i missing here?
There are two ways of dealing with a pup where an associate is involved (and they result gives a slightly different answer)
The EASY way is to eliminate the pup in full from the associate’s profits and then parent takes its share of the associate (adjusted) profits.
The other way is to eliminate just the parent’s / group’s share of the pup where an associate is involved.
By far the easier way is the first
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