dfs- inter company transactions

Tina Sparkles

Can someone please expalin how purchase within the group work please and how to deal with un-realised profits?

Londina

Tina Sparkles wrote: »

how to deal with un-realised profits?

never heard about this thing!

Ampsie

Hi,
i have just been brushing up on this in case it shows up!

Intercompany transactions have to be removed, so I/Co sales are subtracted from revenue
I/Co purchases are subtracted from purchases and
unrealised profits are subtracted from closing inventories.

Hope that helps

Ampsie
:001_smile:

Londina

never heard about all of this!! In what exactly are you talking about, consolidated BS? P&L? cash flows? definitions?:confused1:

CathG

So if the interco trans was worth £2000 - but only £1500 had been sold

do you deduct £2000 from revenue/purchases or £1500 and then
500 from the inventories total for both companies?

CathG

Londina wrote: »

never heard about all of this!! In what exactly are you talking about, consolidated BS? P&L? cash flows? definitions?:confused1:

It comes up it consoliated balance sheets

Londina

CathG wrote: »

It comes up it consoliated balance sheets

If it's about balance sheet, why are you talking about closing inventories? those are in the P&L

I have been doing so many consolidated balance sheet and never came across to this stuff!!

Ampsie

It come up in consolidated INCOME statements.
It's on the June 2007 exam.
Hadn't shown up since so thought i's have a go at it.

Yes Cath G - that's right!

Ampsie
:001_smile:

Londina

Ampsie wrote: »

It come up in consolidated INCOME statements.
It's on the June 2007 exam.
Hadn't shown up since so thought i's have a go at it.

Yes Cath G - that's right!

Ampsie
:001_smile:

thank you for your clarification Ampsie!