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Sometimes we have to write PURP under net asset and sometimes under retained earnings
What I have learnt is if parent sells goods to subsidiary then v have to mention under retained earnings and if subsidiary sells goods to parent v have to mention PURP under net asset
Is it correct sir ??Not really – I’m not honestly sure what you mean by “write PURP under net asset”
When preparing the consolidated retained earnings figure, we deduct the pup from the draft profits of whichever entity sold the asset upon which a profit has been recognised
But we have to remember the basic principles established by Fra Luca Pacioli all those years ago – whilst we are debiting the retained earnings of the selling entity, we must complete the double entry
So whichever asset category is appropriate, we need to reduce the value of that asset by the amount of the pup
This the double entry becomes (in the records of the selling entity):
Dr Retained Earnings
Cr The asset within which lurks the pupOK?
I meant sometimes v have to deduct purp under net asset at acquisition and sometimes not***
Now I understood thank u sir
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