Below is Kaplan problem and its answer, as you can see in answer author hasn’t made PUP adjustment, can you tell me what is the reason? why we don’t have to make PUP Adjustment
Problem: AB has owned 80% of CD for many years. In the current year ended 30 June 20X3, AB has reported total revenues of $5.5 million, and CD of $2.1 million. AB has sold goods to CD during the year with a total value of $1 million, earning a margin of 20%. Half of these goods remain in year?end inventories.
What is the consolidated revenue figure for the AB group for the year ended 30 June 20X3?
Answer: $6,600,000 Consolidated revenue: AB $5.5m + CD $2.1m – $1m intra?group= $6.6 million All intra?group sales and cost of sales are removed from the group accounts