Chapter 5 Inventory - Topic Notes on groups PDF

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Summary

CONSOLIDATION JOURNALS 1. Inventory sold within Group no sale to 3rd Party Dr Revenue Cost of Sales Cr Reverse intragroup sale. Cost of Sales Inventory xx xx Remove unrealized profit. Deferred Tax Income Tax Expense x x Tax effect of eliminated unrealized profit. 2. Inventory sold within Group sold ...

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CONSOLIDATION JOURNALS 1. Inventory sold within Group → no sale to 3rd Party Dr Revenue Cost of Sales

Cr

xxx xxx

Reverse intragroup sale. Cost of Sales Inventory

xx xx

Remove unrealized profit. Deferred Tax Income Tax Expense

x x

Tax effect of eliminated unrealized profit.

2. Inventory sold within Group → sold to 3rd Party in same year :. profit realizes Dr Revenue Cost of Sales

Cr

xxx xxx

Reverse intragroup sale.

1

3. Inventory sold within Group → portion sold to 3rd Party Dr Revenue Cost of Sales

Cr

xxx xxx

Reverse intragroup sale. Cost of Sales Inventory

xx xx

Remove unrealized profit of inventory not sold to 3rd P. Deferred Tax Income Tax Expense

x x

Tax effect of eliminated unrealized profit.

4. Remaining Inventory sold to 3rd Party in subsequent period Dr Retained Earnings Inventory

Cr

xx xx

Remove unrealized profit in opening inventory. Deferred Tax Retained Earnings – Opening Balance

x x

Tax effect of eliminated unrealized profit. Inventory Cost of Sales

xx xx

Recognise unrealized profit that now realizes with sale. Income Tax Expense Deferred Tax

x x

Tax effect of unrealized profit realizing.

2

5. Opening Intragroup Inventory → assume inventory realizes within 12 mths Dr Retained Earnings Inventory

Cr

xx xx

Remove unrealized profit in opening inventory. Deferred Tax Retained Earnings – Opening Balance

x x

Tax effect of eliminated unrealized profit. Inventory Cost of Sales

xx xx

Recognise unrealized profit that now realizes with sale. Income Tax Expense Deferred Tax

x x

Tax effect of unrealized profit realizing.

6. Closing Intragroup Inventory Dr Cost of Sales Inventory

Cr

xxx xxx

Remove unrealized profit. Deferred Tax Income Tax Expense

xx xx

Tax effect of eliminated unrealized profit.

3...