Page 17 - Finac2 Test 1 Slides - 3. Intra-Group Transactions

CONSOLIDATIONS AFTER THE DATE OF ACQUISITION

Property, Plant & Equipment (PPE)

• Unrealised profit included in property, plant and

equipment

• When one entity in a group sells an item of property, plant

and equipment to another entity in the group, the profit

made by the selling entity is seen as unrealised from the

viewpoint of the group for as long as the asset is held within

the group.

• The profit of the group must be decreased with the amount

of unrealised profit, and the tax expense must be adjusted

accordingly.

• The above-mentioned consolidation adjustments will be

made every year until the asset is sold to a party outside the

group and the profit is realised from a group viewpoint

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