At the time of sale , inventory of 120,000, would have been created on both parent and subsidiary SFP’s. Why did we not remove this intra group trading amount of 120’000 from the current assets and current liabilities? Dr Payables (CL) 120,000 Cr Receivables (CA) 120,000
We are not told anything about the outstanding balances, so assume that they have been paid and are not outstanding. If they have been paid then we do not need to eliminate them as they are not in the accounts.