Pg- 318 of SSEI BOOK
Why they haven’t deducted share of unrealised profit, i.e. (80-60)×0.15 ??
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Please briefly explain why you feel this user should be reported.
There is 2 types of transaction happen with associates
Upstream sale:-
The investee sells goods to the investor. Profit is recorded on the investee income statement
Downstream sale:-
The investor sells goods to the investee. Profit is recorded on the investor income statement.
The investor share of profit resulting from the transaction between the investor and associates(investee) must be deferred until the transaction is confirmed by the third party
If you read the question it is clearly mentioned that is it confirmed by the third party so we are not taking unrealized profit