Profit in inventory arising from intragroup sales that has not yet left the group is also eliminated. Mismatched intercompany balances are the most common problem in consolidation, which is why regular intragroup reconciliations matter.
Source: TFRS 10
Related terms
ConsolidationCombining the financial statements of a parent and the subsidiaries it controls as if they were a single economic entity.SubsidiaryAn entity controlled by another entity (the parent).Related partyA person or entity that has a relationship of control, joint control or significant influence with the reporting entity.Accounting estimatesThe determination by management judgement of amounts that cannot be measured precisely, such as provisions, useful lives, expected credit losses and fair values.Accounting policiesThe specific principles, bases, conventions, rules and practices an entity applies in preparing its financial statements.Accrual basis of accountingThe principle of recording transactions as income, expenses, assets and liabilities in the period in which they occur, rather than when cash is received or paid.
Last updated: November 8, 2026 · This definition is for general information only.