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Sir
Under certain circumstances, profits made on transactions between members of a group need to be eliminated from the consolidated financial statements under IFRS.
Which of the following statements about intra-group profits in consolidated financial statements is/are correct?
(i) The profit made by a parent on the sale of goods to a subsidiary is only realised when the subsidiary sells the goods to a third party(ii) Eliminating intra-group unrealised profits never affects non-controlling interests
(iii) The profit element of goods supplied by the parent to an associate and held in year-end inventory must be eliminated in full
A (i) only
B (i) and (ii)
C (ii) and (iii)
D (iii) only
Sir please why (ii) is not correct aswellYour post suggests that option iii) is correct yet I disagree with that. My answer to this question would be option A!
Why is option ii) not correct? Because, when a subsidiary sells to the parent and there is a pup at the year end, the adjustment for the pup goes through the subsidiary’s retained earnings for the year and that affects the nci.
Ok?
Sir but you said it affects the nci. I think so aswell when the subsidiary is the seller, but why the answer is not B, because if (ii) said it affects, the answer considers it wrong.
Because choice ii) says that “it NEVER affects the nci” and that’s incorrect.
Choice iii) is incorrect
Only choice i) is correct, so the answer must be A
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