Hi,
Can someone confirm that I am correct? Subsidiary A sells to Subsidiary B (same top co) goods it buys at cost. Subsidiary B sells to consumer a package compromising of service+these goods. On Group consolidation, I would have thought that a consol adj would be DR Sales CR COS of the intercompany sales? Auditors are less than interested as no profit element of items left in stock and saying no adjustment but I think this is incorrect?
Matthew
Replies (2)
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Yes you eliminate infra group transactions on consolidation. Otherwise sales of the same good are being counted twice.