- This topic has 1 reply, 2 voices, and was last updated 2 months ago by
.
- Posts
After the acquisition, Pandar sold goods to Salva for $15 million on which Pandar made
a gross profit of 20%. Salva had one third of these goods still in its inventory at
30 September 20X9. Pandar also sold goods to Ambra for $6 million, making the same
margin. Ambra had half of these goods still in inventory at 30 September 20X9.Hello! My question is why we shouldn’t add PUP = 240 on Sale with Associate to Cost of sales?
Cost of sales
$000
Pandar 126,000
Salva (100,000 × 6/12) 50,000
Intra?group purchases (15,000)
Additional depreciation: plant (5,000/5 years × 6/12) 500
Unrealised profit in inventories (15,000/3 × 20%) 1,000
–––––––
162,500Hi,
The answer appears to use the older treatment of a PUP between the group and the associate. There should be an adjustment to CoS for the sale between the group and the associate as it is a downstream transaction from the parent to the associate. You can check the syllabus guide on the ACCA website to confirm this and the class notes, if you wish.
Thanks
- You must be logged in to reply to this topic.