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Hillusion Co acquired 80% of Skeptik Co on 1 July 20X2. In the post-acquisition period Hillusion Co sold goods to Skeptik Co at a price of $12 million. These goods had cost Hillusion Co $9 million. During the year to 31 March 20X3 Skeptik Co had sold $10 million (at cost to Skeptik Co) of these goods for $15 million.
How will this affect group cost of sales in the consolidated statement of profit or loss of Hillusion Co for the year ended 31 March 20X3?
A Increase by $11.5 million
B Increase by $9.6 million
C Decrease by $11.5 million
D Decrease by $9.6 millionI don’t know how to calculate PUP in case of P and S selling to each other like this. Can anyone help?
Hi,
You can work out the margin from the initial intra-group sales of $12m, as we know the cost and can then work out the profit.
Once you’ve calculated the margin you can then apply this to the value of goods still held at the reporting date to calculate the PURP.
Have a go and see how you then get on. If you’ve still struggling then give me a shout.
Thanks
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