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When associate sells goods to parent that time do v deduct PURP of associate under investment in associate ??
That depends upon which method you follow
BPP and Kaplan appear to do what you suggest
I teach this:
Whether it’s a sale from associate to parent or parent to associate, I ALWAYS deduct the full pup from the associate’s retained earnings
And then take the parent’s share of adjusted associate profit after tax as a pre-tax income in the group
In that way, the group retained earnings are reduced by the correct figure (the parent’s share of the pup) and the investment in associate is correctly reduced by the automatic reduction of the post-acquisition profits of the associate
OK?
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