This free, guided checker walks your finance team through the key decision points for IFRS 10 Intercompany Transaction Elimination. Answer a few questions to see the likely treatment and the evidence to document.
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This tool is a high-level IFRS screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
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Intercompany sales, purchases, loans, dividends, management fees, and asset transfers all require elimination on consolidation regardless of whether cash changed hands.
No elimination entries are required this period; retain evidence that intragroup accounts are nil, because IFRS 10.B86(c) applies only to transactions between entities of the group.
Official guidance: IFRS issued standards
Direction determines how unrealised profit elimination affects non-controlling interest; downstream eliminates profit in full from group inventory, upstream and lateral allocate NCI share.
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Official guidance: IFRS issued standards
Unrealised profit in inventory, property, plant and equipment, and intangible assets must be eliminated to the extent the asset remains within the consolidated group.
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Official guidance: IFRS issued standards
Eliminate the selling entity's profit embedded in the buyer's carrying amount; for depreciable assets, adjust depreciation prospectively after elimination.
Quantify the seller's margin remaining in closing inventory or asset carrying amounts; IFRS 10.B86(c) requires profits recognised in assets from intragroup transactions to be eliminated in full.
Official guidance: IFRS issued standards
IFRS 10.B94 requires NCI to share in the subsidiary's profit including unrealised results on upstream and lateral transactions; downstream unrealised profit is fully eliminated from group profit.
Attribute the NCI share of the eliminated profit to non-controlling interests; IFRS 10.B94 requires profit or loss and each component of OCI to be attributed to the owners of the parent and to NCI.
Official guidance: IFRS issued standards
IAS 12.24 requires recognizing deferred tax on consolidation adjustments that create deductible or taxable temporary differences, typically a deferred tax asset on eliminated profit in inventory.
Recognise deferred tax at the buying entity's rate on the temporary difference created by the elimination; IFRS 10.B86(c) confirms IAS 12 applies to these consolidation differences.
Official guidance: IFRS issued standards
After eliminating unrealised profit in PPE, adjust depreciation expense in consolidation worksheets to reflect the asset's cost to the group rather than the inflated transfer price.
Post the recurring entry reversing depreciation on the eliminated profit element; IFRS 10.B86(c) keeps transferred assets and their depreciation at cost to the group.
Official guidance: IFRS issued standards
Intercompany sales, cost of sales, management fees, interest income and expense, and dividend income must net to zero in consolidated profit or loss regardless of unrealised profit adjustments.
Post income statement eliminations for every matched intragroup pair; IFRS 10.B86(c) requires intragroup income, expenses, and cash flows to be eliminated in full.
Official guidance: IFRS issued standards
Intercompany loans, trade receivables and payables, and cash pooling balances must reconcile and eliminate; foreign exchange differences on intercompany balances may require separate treatment.
Reconcile counterparty balances and eliminate them in full; IFRS 10.B86(c) does not permit intragroup assets and liabilities to remain in consolidated amounts.
Official guidance: IFRS issued standards
Dividends paid within the group are eliminated in full; upstream dividends may affect NCI allocation in the period of declaration or payment per group policy consistently applied.
Eliminate intragroup dividend income against the paying entity's distribution recorded in equity; IFRS 10.B86(c) requires intragroup income to be eliminated in full.
Official guidance: IFRS issued standards
After all eliminations, no intercompany revenue, expense, receivable, payable, or unrealised profit should remain in consolidated amounts; document any immaterial rounding differences.
Eliminations are complete; retain the reconciliation evidencing full elimination under IFRS 10.B86(c) and lock the consolidation worksheet. Investigate timing, foreign exchange, and mapping differences until intragroup residuals clear; IFRS 10.B86(c) requires elimination in full before sign-off.
Official guidance: IFRS issued standards
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