Elimination of inter unit profit

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

03 November 2012 Let suppose ABC Ltd has 2 division X and Y.

Division X has manufactured cetain material and sold it to Division Y for Rs. 100, the cost of manufacturing the material for Division X is Rs. 80.

Division Y has capitalised the material received from Division X as Fixed Assets.

What would be the accounting entry in the books of Division A and Division B and at Consolidated entry in books of ABC Ltd. ?

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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03 November 2012 As standalone financial between division you can show the profit and fixed asset value actual

while consolidating the profit for inter units will be eliminated accordingly the fixed asset of the other unit will restate