ACCA Financial Accounting / Consolidated Profit or Loss / Elimination of Unrealised Profit

In this informative video, I delve into the intricacies of ACCA Financial Accounting, focusing on Consolidated Profit or Loss and Unrealised Profit Adjustments, with a special emphasis on scenarios where a subsidiary sells goods to its parent company.
Consolidated Financial Statements
Consolidated financial statements combine the financial results of a parent company and its subsidiaries, presenting them as if they were a single economic entity1. This process involves eliminating intercompany transactions to avoid overstating the group's financial position and performance.
Unrealised Profit Elimination
When a subsidiary sells goods to its parent company, and some of these goods remain unsold in the parent's inventory at year-end, an unrealised profit situation arises1. This profit is considered "unrealised" from the group's perspective because it hasn't been earned through a sale to an external party.
Unrealised Profit adjustment when Parent recognises the profit.
• ACCA Financial Account...