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unrealized profit on intratrading

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › unrealized profit on intratrading

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by MikeLittle.
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  • August 5, 2017 at 4:55 pm #400590
    lavan073
    Participant
    • Topics: 5
    • Replies: 2
    • ☆

    sir
    you states in my previous question that the elimination of the unrealized profit is effectively reducing the figure for closing inventory (that’s where this pup is hiding) so by reducing closing inventory, that has the effect of increasing cost of sales and that reduces the profit figure
    therefore the adjustment is taken place in the buyer’s cost of sale so, why the unrealized profit element is attributable to seller ?

    August 5, 2017 at 7:03 pm #400603
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23309
    • ☆☆☆☆☆

    Because the unrealised profit is a profit that has been recognised by the seller when the seller recorded the sale

    Therefore the provision for that unrealised profit should come out of the seller’s profits

    Is that better?

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  • The topic ‘unrealized profit on intratrading’ is closed to new replies.

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