Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

Unrealised Profits

This topic has 4 replies, 3 voices, and was last updated 4 years ago by P2-D2.

Viewing 5 posts - 1 through 5 (of 5 total)

Author

Posts
March 4, 2018 at 10:15 pm #440225
mensaha
- Topics: 1
- Replies: 1
Can you please help me understand how to treat unrealised profit. Does it go in the Net assets workings and retained earnings ?
Does it only apply when the parent sells to the sub or when the sub sells to the parent or both.

Please help … I am finding it a bit confusing,many thanks .
March 7, 2018 at 9:15 am #440914
P2-D2
Keymaster
- Topics: 4
- Replies: 6317
Hi,

The unrealised profit is removed as a consolidation adjustment when either P sells to S, or when S sells to P. The key to remember with regards to the adjustment is that we adjust the sellers books for any unrealised profit.

P sells to S – DR RE (P is the seller so adjust in (W5)) CR Inventory

S sells P – DR RE (S is the seller so adjust in (W2) at reporting date column) CR Inventory

Thanks
March 16, 2018 at 5:50 pm #442807
Felicity
- Topics: 0
- Replies: 1
beautifully explained
March 18, 2018 at 4:00 pm #442961
P2-D2
Keymaster
- Topics: 4
- Replies: 6317
@felicitylite said:
beautifully explained

Thanks! I think that’s the first time someone has called one of my explanations beautiful, thank you!
March 18, 2018 at 4:00 pm #442962
P2-D2
Keymaster
- Topics: 4
- Replies: 6317
@felicitylite said:
beautifully explained

Thanks! I think that’s the first time someone has called one of my explanations beautiful, thank you!
Author

Posts

Viewing 5 posts - 1 through 5 (of 5 total)

You must be logged in to reply to this topic.