- This topic has 1 reply, 2 voices, and was last updated 10 years ago by
.
Viewing 2 posts - 1 through 2 (of 2 total)
- Posts
Hi Mike,
Please explain why pups on the below note is not adjusted as per June 2015 consolidation question.
Merchant sold inventory to Nathan for 12m at fair value. Merchant made a loss on the transaction of 2m and Nathan still holds 8m inventory at the year end.
Hi,
The transaction results in a loss rather than a profit. As the goods were sold at fair value then that loss is treated as being fully realised even though it is a transaction between P and S, and no adjustment is made. Think of it as being prudent.
This was the first time something like this appeared and I doubt that many people treated it correctly in the exam. Just have an awareness of it in case it were to make a reappearance.
Thanks
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.