The Student Room Group

Unrealised Profit Question

If the Subsidiary sold goods to a parent. And made a profit of £3.6 million ( £9.6m (sold to Parent for) - £5.4 ( cost of product ) . And the Parent still has £1.5 million in Inventory left at the year end. What is the unrealised Profit?

So the profit is £ 3.6 million, and he still has £1.5 million inventory. So I thought the unrealised profit is £2.1 million ( £3.6 - £1.5 ). But apparently it is 600k. Can someone explain to me how to this answer?
Original post by YamsAreYams
If the Subsidiary sold goods to a parent. And made a profit of £3.6 million ( £9.6m (sold to Parent for) - £5.4 ( cost of product ) . And the Parent still has £1.5 million in Inventory left at the year end. What is the unrealised Profit?

So the profit is £ 3.6 million, and he still has £1.5 million inventory. So I thought the unrealised profit is £2.1 million ( £3.6 - £1.5 ). But apparently it is 600k. Can someone explain to me how to this answer?


unrelaised profit = Amount sold to parent - cost of product - profit made

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