- This topic has 1 reply, 2 voices, and was last updated 8 years ago by
.
- Posts
- Topics: 4
- Replies: 0
- ☆
What are the correct entries to eliminate unrealised profits on sales made from associate to parent?
The study text appears to be silent but the revision kit states that this will CR group inventories. Is that the correct treatment? I thought the associate’s results only entered the SOFP through the investments line.
Cheers!
My way of achieving the adjustment is this:
calculate the FULL amount of the pup involved in the closing inventory of goods sold to group entities
enter that figure in working W3 Consolidated Retained Earnings working in the associate’s column
apply the group’s percentage to the (now) adjusted associate profit after tax and carry the calculated amount into the parent’s column in working W3
when calculating working W5A Investment in Associate, the calculation is:
Cost of investment in associate +
Group’s share of associate’s post-acquisition retained earnings (recently reduced by that full amount of pup) –
Amounts written off by way of impairment of investment in associateTry that!
- The topic ‘PUP on Upstream sales from associate’ is closed to new replies.