Intragroup elimination
The group is presented as a single economic entity, so internal receivables, payables, sales and related expenses are eliminated. Profits included in assets still held within the group may also need elimination, with associated non-controlling-interest and tax effects considered when relevant. Elimination does not erase transactions with parties outside the group.
Worked example
A parent sells goods to its subsidiary for $100,000. The group eliminates the $100,000 internal sale and purchase; if some goods remain in closing inventory, it also assesses any unrealised intragroup profit.
Common mistake
Eliminating only the receivable and payable while leaving internal revenue in group revenue, or eliminating a later sale to an outside customer.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |