Asked by Patrick Allison on Jun 08, 2024
Verified
Unrealised profits on the intragroup sale of inventory will only be eliminated on consolidation in the year in which they arise.
Unrealised Profits
Profits that have been accumulated on paper through asset appreciation or investments but have not been converted into cash through sales.
Intragroup Sale
Sales transactions that occur between entities within the same group or parent company, often used in the context of transfer pricing and consolidation adjustments.
Consolidation
The process of combining the financial statements of two or more entities into one, typically within a group controlled by a parent company.
- Understand the concept of unrealised profits and losses within intragroup transactions and their implications for consolidated financial statements.
Verified Answer
DV
Dustin Van HeuvenJun 14, 2024
Final Answer :
False
Explanation :
Unrealized profits on intragroup sales of inventory are eliminated in the year in which they arise, as well as in subsequent years until the inventory is sold to external parties. This is in accordance with IFRS standards.
Learning Objectives
- Understand the concept of unrealised profits and losses within intragroup transactions and their implications for consolidated financial statements.