Intra-group trading
In this lesson, you'll learn how to eliminate intra-group trading transactions when consolidating group financial statements under IFRS 10.
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In this lesson
- 0:00 Intra-group trading and consolidation
- 0:42 Intercompany balances and receivables
- 1:31 Unrealised profits in group inventory
- 2:52 Parent company sales to subsidiary
- 4:03 Worked example: Iowa and Georgia
- 6:41 Margins versus mark-ups explained
- 7:17 Quick adjustment method for subsidiaries
About this lesson
You'll master two key adjustments: removing intercompany receivables and payables that cancel each other out, and eliminating unrealised profits from inventory when goods sold between group companies remain unsold to external parties at the period end. Understanding who the seller is (parent or subsidiary) is crucial, as it determines whether the profit adjustment affects only retained earnings or is split between the parent and non-controlling interests. This is essential for the FA exam and forms a core part of consolidation technique.
Duration: 8m
Transcript
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