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I have done the calculations for the following (mini exercises) and they are correct but what I don’t understand is – in the answer page, it is the associate co account that is being reduced although the holding co and / subsidiary co sold the items.
H sold $80,000 goods to A at a gross profit of 30%
A had sold none of these goods by the end of the yearS sold $ 70,000 goods to A at a mark up of 20%
A had sold $4,000 of these goods by the end of the yearThat’s the easy way of dealing with a pup when an associate is concerned either as buyer or seller.
It gives a slightly different answer than the other way – we need to eliminate the group’s share of an associate-involved pup. The easy way is to place the pup against the associate because we then, when we take our share of associates post-acquisition profits, we shall automatically eliminate the pup
Ok?
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