Intra company sales

[Abuzar Qazi]

In consolidation...Unrealized gain on intra company sale transactions be eliminated from which company because in books I have gone through two contrasting treatments One says elimination be made in the books of holding company no matter who so ever make the sale Other say elimination be made in the respective seller company

Kindly guide which treatment to be followed in exams

[imdad1]

@ abuzar qasim qazi 99 entry..
well yar we are ultimately consolidating everything in holding company accounts. thus there are tywo ways to deal with unrealised profit on intra company transactions
1) we adjust/eliminate unrealised profit in subsidary company accounts.than consolidate its P/L in hoding company's P/L

2) or we can first combine subsidary company P/l prior to unrealised profit elimination with holding co P/l and than pass adjusting entry.

the ulimate objective is we reverse that profit which is still unrealised in other words whose profit revolves still within the group entities...
i wish the above discussion will be helpful

[Abuzar Qazi]

That's fine Imdad.......I got it

Thnx