Consolidated statement of profit or loss

Hello,

Unfortunately, there is something I don’t really understand about consolidation of P&L.

In case there was intra-group sale in the period we need to adjust both Revenue and Cost of sales on the day of consolidation to eliminate costs and revenues of this sale.

The piece I don’t understand is why we reduce the cost of sale by the same amount as revenue.

For instance, in example 3 in the Chapter 12 Nick sold goods to Gary at $10m price. Nick used mark-up of 25% to get to $10m price. Thus, Nick cost of sale is $8m. Based on that I would would reduce group revenue by $10m and group cost of sale by $8m but in the lecture both Revenue
and CoS were reduced by $10m and I don’t understand why.

Could you please clarify this?

Thank you.