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In Lecture Video, 2C of Consolidated Financial Statements. You made Provision of Unrealised profit and subtracted profit from one Entity’s retained earning.
Why are we not subtracting from both entities?
Seller overstates profit by selling of course more than cost.
Buyer also overstates his profit by having a Overstated Closing Inventory. So should be also subtract profit from the Retained earnings of the buyer?What is in the lecture is correct. It would be nonsense to subtract from both.
The buyer has not overstated their profit. Their profit is their sales less their cost of goods sold.
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