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Unrealized intercorporate profit and down/upstream sales

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What portion of the unrealized intercorporate profit is eliminated in a downstream sale? In an upstream sale? Explain.

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Your discussion is 176 words and explains upstream and downstream treatment of unrealized profits.

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A downstream sale is from parent to subsidiary. An upstream sales is from subsidiary to parent. All of the downstream sale profits are eliminated for the purpose of consolidated reporting. That is because as a consolidated unit, they are one economic entity and so there was no "sale" to oneself. ...

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Carol Sargent, PhD
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  • MSc, University of Virginia
  • PhD, Georgia State University
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