Intra Group transactions: Has anybody got an easy approach to record them?? TIA

Hi Alua, for intra company transactions and unrealised profit, basically you just need to understand the logic, then it wont be so confusing with double entries.

For example: intra group balance need to be eliminated when doing consolidation, the difference will be due to cash in transit or good in transit. Cash in transit will be added to cash/bank and good in transit will be added back to inventory in consolidation.
Eg: Balance in P: 4000 (Dr, which is receivable)
Balance in S : 3000 (Cr – payable to P)
The different of 1000 is due to cash in transit.
So when doing intra group balance concilation: deduct group receivable the whole 4000, add back 1000 CIT and deduct group payable 3000
=> Dr. Payable 3000
Dr Bank. 1000
Cr Receivable. 4000

In case of the different due to goods in transit (same as above, just the 1000 difference due to GIT will be added to closing inventory, so actually account payable of S has to be 4,000
=> to eliminate intra-balance:
DR. AP 4000
CR. AR 4000

1,000 added back to inventory, hence reduce cost of goods sold (if preparing SOCI)
DR. Inventory 1000
CR COGS 10000

Now come to unre profit: eg out of 1000 inventory remained unsold in S, 200 are URP ((P mark up 25%). So actually, the cost of those inventory TO THE GROUP is only 800, but now included in S as 1000, so inventory is overstated by 200 – the amount of URP. so the closing inventory of the group need to be reduced by this, as a result cost of good sold will be increased by this amount
Dr. COGS 200
CR. closing inventory 200

I hope you find this easier to understand.