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PUP

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › PUP

  • This topic has 2 replies, 2 voices, and was last updated 11 months ago by alawi sayed.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • July 21, 2021 at 8:49 pm #629056
    alawi sayed
    • Topics: 138
    • Replies: 148
    • ☆☆☆

    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.

    July 22, 2021 at 11:54 am #629104
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6119
    • ☆☆☆☆☆

    Hi,

    The PUP is always added to the cost of sales figure. By adding it then we are increasing the expense and reducing the profit.

    Thanks

    July 23, 2021 at 9:25 am #629193
    alawi sayed
    • Topics: 138
    • Replies: 148
    • ☆☆☆

    Thanks

  • Author
    Posts
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