Question

Help me understand the effect of fair value movement in Post acquisition profit

I understand that the excess depreciation due to increase in fair value of PPE should be reduced in order to calculate the post acquisition profit.

However, Im having a difficult time understanding the fair value increase in inventory and its treatment in calculating post acquisition profit.

I see in the BPP study text, they have reduced the FV increase in calculating post acquisition profit.

I would be extremely grateful if someone could guide me in this.

 

Many thanks