Intra group

This topic has 3 replies, 2 voices, and was last updated 8 years ago by P2-D2.

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April 15, 2018 at 10:51 pm #446795
zkaay
Participant
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Hi sir,

I have not understand this bit clearly could u plz explain it in simple way

( how to deal w intragroup profit/loss from transaction and inventory holding)

For p/l

Thanks

Let me write an example so i can understand it better.

Marchant sold inventory to nathon for 12 m at fair value. Marchant made a profit on transaction of 2 m and nathon still hold 8m in inventory at ye.
April 19, 2018 at 9:34 pm #448180
P2-D2
Keymaster
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Hi,

Can you be specific please about what it is exactly that you do not understand about the elimination of a provision for unrealised profit? If you use your own example above and answer it then I can help.

Thanks
April 21, 2018 at 11:13 am #448360
zkaay
Participant
- Topics: 212
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Hi tutor,

To answer my previous example

1 we have to eliminate 12 m from revenue and cos

Then what do we have go do with figures 2 and 8 ?
April 28, 2018 at 7:45 pm #449208
P2-D2
Keymaster
- Topics: 4
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Hi,

Yes, you eliminate the $12m as you say but we still own 2/3 of the inventory ($8m/$12m) so we eliminate 2/3s of the $2m profit. This is done by adding the amount to cost of sales of the seller in the consolidation schedule.

Thanks
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