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