IAS 28 Investments in Associates and Joint Ventures

All topics related to IFRS Standards.
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Joined: 17 Mar 2023, 20:01

IAS 28 Investments in Associates and Joint Ventures

Post by catalinsb »

Dear all,
I am not sure how to eliminate un-realised profit on sales made by Parent to the Associates or vice versa in the Consolidated statement of profit or loss
I read a lot of topics but it confuses me, some people say that we do not adjust revenues or cost of sales, while others say that we do.

Taking the example from the site.
If the Parent sales Inventory at a cost of 700 for 1.000 to Associates (20%). In this case the Unrealised profit is 300. Parent share is 300* 20% = 60

The accounting entry I have found for this transaction is:
Debit: Cost of sale Parent (+) (PL) 60
Credit: ,,The line Investment in Associates,, (-) (FP) 60
also this un-realised profit reduces the ,,Share of profit of the Associates,, 60

If the sale is made by the Associate to the Parent
Debit ,,Share of profit of associates,, (-) (the line in profit or loss)
Credit: Inventory (-) (FP) because the Parent has the inventory
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