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Dear Mike,
Please help to clarify how we deal with PUP in situation where Sub sells to the Parent.
I know when Parent sells to Sub we reduce from Parents Cons. Ret. Earning.
But how are we to deal with it when Sub sells to Parent please?
I really struggled to grasp this
Exactly as you would expect!
If parent sells to subsidiary, the pup is adjusted in the parent’s column (Debit (Parent) Retained Earnings, Credit Combined Inventory)
So, when the subsidiary sells to the parent, the pup is adjusted in the subsidiary’s column …… but it’s EXACTLY the same entry!
Debit (Subsidiary) Retained Earnings, Credit Combined Inventory
There really is nothing to get confused about, particularly since you say that you are happy with adjusting pups in the sale-to-subsidiary situation!
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