Page 10 - Finac2 Test 1 Slides - 3. Intra-Group Transactions

CONSOLIDATIONS AFTER THE DATE OF ACQUISITION

Inventories

Unrealised profit in closing inventory

• If a subsidiary sells inventory to its parent and

the parent still has some of this inventory on

hand at year-end

• the cost of this inventory is too high because it

includes profit which has not been realised with

a third party outside the group.

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