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PURP Recording System

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › PURP Recording System

  • This topic has 3 replies, 2 voices, and was last updated 3 months ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • November 2, 2022 at 4:00 am #670505
    MuhammedSaleem
    Participant
    • Topics: 4
    • Replies: 1
    • ☆

    Sir,
    When we are calculating Retained earnings and NCI, PURP should be subtracted seperately after the post acquisition, isn’t it?
    Eg:- Calculating the NCI for ex7:
    FV of NCI 5000
    Post acquisition (15000×25%) 3750
    8750
    Less: PURP (1200)
    7550

    In our campus they taught in this method. Also in the study text for ex., answers are in this method
    I’m totally confused, which is correct??
    Please clear my doubt

    November 2, 2022 at 7:44 am #670513
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51582
    • ☆☆☆☆☆

    The PURP is subtracted from the retained earnings of whichever of the two companies sold to the other company.

    So if it is the parent that sold to the subsidiary (and therefore the inventory at the end of the year is with the subsidiary) then the PURP is subtracted from the retained earnings of the parent.

    If the subsidiary sold to the parent (and therefore the inventory is with the parent) then the PURP is subtracted from the retained earnings of the subsidiary.

    This is the only correct way (and is the way I show it and the way that Kaplan show it – I have obviously no idea what your ‘campus’ does).

    November 2, 2022 at 10:33 am #670525
    MuhammedSaleem
    Participant
    • Topics: 4
    • Replies: 1
    • ☆

    Understood, I’ll follow your method hereafter. Thank you for clearing my doubt

    November 2, 2022 at 5:12 pm #670535
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51582
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘PURP Recording System’ is closed to new replies.

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