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charm.
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charm
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Dear Sir,
I want to known about,
One of subsidiary company sales another subsidiary (inta-group transactions) with margin (20%). In this situation how IAS requirement have in the inventory valuation of subsidiary Financial Reports (Not Consolidation Report).
Thank You
Charm Myae Aung
P2-D2
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Hi,
The key is that the subsidiary is a separate legal entity, so regardless of who it sells any goods to, the inventory is valued at the lower of cost and net realisable value. Just because the company is a subsidiary of another entity doesn’t mean that there are any different rules.
As you seem aware there could then be a consolidation adjustment to remove any intra group profit on goods that are unsold outside of the group at year-end.
Thanks
Chris
charm
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Thank you Chris ,
Subsidiary is a separate legal entity, so IAS 2 is require in valuation of inventory.
Only to remove intra group profit , conso adjustment require in conso statements.
Thank you for your answer , I am clear now.
In addition , to make conso adjustment for conso statements for inventory that unsold outside of the group at the year end , any disclosure require or not in the subsidiary financial statements? If require please refer IAS number and reference.
I think related party disclosure is require in this situition.If true , only related party disclosure is enough to make conso adjustment.
Thank You
Charm Myae AungP2-D2
- Topics: 4
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Hi,
There’s no particular requirement to disclose the level of unsold intra-group inventory. It will be disclosed along with the rest of the unsold inventory in the inventory disclosure note as per IAS2. This requires us to split the year-end inventory into RM/WIP/FG.
Yes, you’re correct about the usual RP disclosures in IAS 24.
Thanks
charm
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Thank You
charm
- Topics: 3
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But sir,
I don’t known ecactly ,
If subsidiary company not disclose inventory(that inventory are purchase from parient company with margin and remain unsold), How Parient company can known subsidiary’s inventory balances unsold outside the group at year-end to make conso adjustment? How can receive information about this? Because inventory balances on subsidiary can be both (balance purchase from parient company with transfer price) and (balance purchase from other suppliers).
charm
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