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Unrealized Profit

Accountancy

If inventory is valued @10% less means profit should also be reduced by 10% ? so unrealized profit will be 22,500 ? Video Details ------------- P1 - Advanced Accounting - Without AS Amalgamation of Companies #55. Illustration 15 - Bank a/c adjustment - Part 3

Anirudh Srinivassan N

CA Inter

★ 2K+

11-Sep-24 15:50

326

Answers (4)

Both cost and profit element are reduced. Not only profit element. So it wont be 22500.

CA Suraj Lakhotia

Admin

12-Sep-24 12:01

CA Suraj Lakhotia Admin

Both cost and profit element are reduced. Not only profit element. So it wont be 22500.

Doesn't the profit gets reduced in proportion to the cost?

Thread Starter

Anirudh Srinivassan N

CA Inter

★ 2K+

12-Sep-24 13:58

Say cost is 8,000 and selling price is 10000. Profit is 2000. If I reduce the value of inventory by 10%, the total value of inventory becomes 9,000. So now only 1000 of unrealised profit is left.

CA Suraj Lakhotia

Admin

12-Sep-24 13:59

CA Suraj Lakhotia Admin

Say cost is 8,000 and selling price is 10000. Profit is 2000. If I reduce the value of inventory by 10%, the total value of inventory becomes 9,000. So now only 1000 of unrealised profit is left.

Understood sir Thank you

Thread Starter

Anirudh Srinivassan N

CA Inter

★ 2K+

12-Sep-24 14:20

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