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Unrealised Profits

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Unrealised Profits

  • This topic has 4 replies, 3 voices, and was last updated 7 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
    Member
    • 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: 7163
    • ☆☆☆☆☆

    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
    Member
    • Topics: 0
    • Replies: 1
    • ☆

    beautifully explained

    March 18, 2018 at 4:00 pm #442961
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    @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: 7163
    • ☆☆☆☆☆

    @felicitylite said:
    beautifully explained

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

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    Posts
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