Where an intragroup sale of an asset at a profit has been made and the asset was classified as plant in the selling entity's books,but subsequently classified as inventory in the buying entity's books,a credit adjustment is required against cost of sales in the year of sale.

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When an intragroup sale of an asset at a profit has been made and the asset was classified as plant in the selling entity's books, but subsequently classified as inventory in the buying entity's books, a credit adjustment is required against cost of sales in the year of sale. This adjustment is required to ensure that the profit is only recognized once, and is properly allocated between the two entities.

Where an Intragroup Sale of an Asset at a Profit