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Pandar 415 Urgent!!!

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Pandar 415 Urgent!!!

  • This topic has 1 reply, 2 voices, and was last updated 2 months ago by P2-D2.
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  • Author
    Posts
  • December 2, 2022 at 9:34 pm #673155
    nigarvmammadli
    Member
    • Topics: 1
    • Replies: 0
    • ☆

    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
    –––––––
    162,500

    December 3, 2022 at 12:57 pm #673213
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6460
    • ☆☆☆☆☆

    Hi,

    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

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    Posts
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