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Intercompany Margin Elimination

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edited Sep 25, 2019 4:40PM in Costing 8 comments

Summary

How do we eliminate the profit in Inventory /gross margin arises out of Intercompany sales/ transfers at transfer price across Inventory organization underneath different profit business unit ?

Content

How do we eliminate the profit in Inventory /gross margin arises out of Intercompany sales/ transfers at transfer price across Inventory organization underneath different profit business unit ?

 

Scenario 1:

Inv Org A (PBU A) transfers item x (Std cost = 10) at the transfer price rate of Cost + 10% = 11

Inv Org B (PBU receives item x

Inv Org A made a profit of 1 which is fine for books of Org A.. however when we do a consolidation for all entities (Org A &

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