Where there is an intragroup sale of inventory and the inventory has been sold to external parties prior to the end of the reporting period,no adjustment is required on consolidation.

Question

Quizplus · Accepted Answer

When there is an intragroup sale of inventory and the inventory has been sold to external parties prior to the end of the reporting period, an adjustment is required on consolidation to eliminate the effect of the transaction. This is because the sale between the group entities should be eliminated to reflect the consolidated financial position of the group. Therefore, option B is the correct answer.

Where There Is an Intragroup Sale of Inventory and the Inventory