dfs- inter company transactions

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Tina Sparkles
Tina Sparkles Registered Posts: 17 New contributor 🐸
in AAT Level 4 (Level 8 in Scotland)
Can someone please expalin how purchase within the group work please and how to deal with un-realised profits?

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  • Londina
    Londina Registered Posts: 814 Epic contributor 🐘
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    Tina Sparkles wrote: »
    how to deal with un-realised profits?

    never heard about this thing!
  • Ampsie
    Ampsie Registered Posts: 145 Dedicated contributor 🦉
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    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
    Londina Registered Posts: 814 Epic contributor 🐘
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    never heard about all of this!! In what exactly are you talking about, consolidated BS? P&L? cash flows? definitions?:confused1:
  • CathG
    CathG Registered Posts: 145 Dedicated contributor 🦉
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    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
    CathG Registered Posts: 145 Dedicated contributor 🦉
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    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
    Londina Registered Posts: 814 Epic contributor 🐘
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    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
    Ampsie Registered Posts: 145 Dedicated contributor 🦉
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    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
    Londina Registered Posts: 814 Epic contributor 🐘
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    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!

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