Page 452 - SBR Integrated Workbook STUDENT S18-J19
P. 452
Chapter 25
Example 7
Provisions for unrealised profits
The intragroup trading of $15 million must be removed from the consolidated
financial statements:
Dr Revenue $15m
Cr Cost of Sales $15m
The profit on the sale that remains in group inventories at the reporting date
must be removed. This amounts to $2 million ($15m × 20/120 × 80%).
Dr Cost of sales $2m
Cr Inventories $2m
A deferred tax asset of $0.4 million ($2m × 20%) must be recorded in the
consolidated statement of financial position, as well as a corresponding
reduction to the tax expense in the consolidated statement of profit or loss.
Dr Deferred tax asset $0.4m
Cr Tax expense (P/L) $0.4m
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