Explore BrainMass

Inventory profits

How do unrealized intercompany inventory profits from a prior period affect the computation of consolidated net income when the inventory is resold in the current period? Is it important to know if the sale was upstream or downstream? Why or why not? Explain.

© BrainMass Inc. brainmass.com July 22, 2018, 5:00 am ad1c9bdddf

Solution Preview

Unrealized inter-company inventory profits are deferred until the inventory is sold to outside of the consolidated group. This is usually in the period following the deferred gross profit entry and so unrealized profits from a prior period usually result in the ...

Solution Summary

Your tutorial is 156 words and briefly explains.