The effect of an intragroup sale of inventory in a prior period,where the inventory is still on hand at the end of that prior period,is that a debit consolidation adjustment is made to opening retained earnings.

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An intragroup sale of inventory in a prior period means that one entity within a group of companies sold inventory to another entity within the same group in a previous period. If the inventory is still on hand at the end of that prior period, a consolidation adjustment is required to ensure that the financial statements of the group are presented fairly. This adjustment involves debiting opening retained earnings by the amount of profit that was eliminated as a result of the intragroup sale.

The Effect of an Intragroup Sale of Inventory in a Prior