PUP

Hello Sir, In the following question I wonder why they added PUP of .2m rather than deducting from cost of goods sold, Thanks, ----------------------------------------------------------------------------------------------------------------------------- Harry acquired an 80% holding in Style on 1 April 20X6. From 1 April 20X6 to 31 December 20X6 Style sold goods to Harry for $4.3m at a mark?up of 10% Harry's inventory at 31 December 20X6 included $2.2m of such inventory. The statements of profit or loss for each entity for the year to 31 December 20X6 showed the following in respect of cost of sales: Harry $14.7m Style $11.6m What is the cost of sales figure to be shown in the consolidated statement of profit or loss for the year to 31 December 20X6? A $18,900,000 B $20,200,000 C $19,100,000 D $19,300,000 Answer D Cost of sales = $14.7m + $8.7m (9/12 × $11.6m) – $4.3m (intra?group sale) + $0.2m (PUP) = $19.3m The PUP is $2.2m × 10/110 = $0.2m. If you chose B, you have not time?apportioned the results. If you chose A you have deducted the PUP rather than adding it. If you chose C, you have missed the PUP.