Manufacturing Groups · Track 2 · Tutorial 3 of 3
Eliminate the margin on goods from a foreign factory
When a factory abroad sells to a group company, its margin is in the group’s profit until the goods are sold outside. Removing it in the right currency, at the right rate, takes out exactly the profit that went in.
1Work out the margin
Your Group reports in SGD. Company A, the holding company, keeps its books in SGD. Company M, a factory in Malaysia, keeps its books in MYR, and sells its goods to Company D, the group’s distributor in Singapore, in SGD. The figures are illustrative.
Company M sells to Company D at cost plus 25%. At 31 October 2026, Company D still holds goods from Company M that it bought for SGD 50,000. Company M sold them in October for MYR 160,000, translated in the group’s profit and loss at October’s average rate of 3.2000.
| The margin in MYR | MYR 160,000 × 25 ÷ 125 = MYR 32,000, the profit Company M booked on the goods still held. |
|---|---|
| The margin in SGD | MYR 32,000 at the rate the sale was translated at, 3.2000, is SGD 10,000.00. That is exactly the profit the sale added to the group’s figures. |
| Goods bought in earlier months | Use the average rate of the month each was sold in. |
| Goods sold outside the group | Their profit is the group’s. Leave them out. |
2Enter the month-end position
- Open Intercompany → Unrealised Profit, choose Oct-2026, and click Add a new Elimination Entry.
- Enter the Elimination ID URP-M-D-2026-10, keep the Date 31 October 2026, and enter the Description Margin in Company D stock from Company M, 31 October 2026.
- Under Debit Lines, choose Company M and 5000 Cost of Sales, Currency MYR, Exch. Rate 0.3125, and 32,000.00.
- Under Credit Lines, choose Company D and 1400 Inventory, SGD, 1.0000, and 10,000.00.
- When the entry shows Entry is balanced, click Confirm.
| Exch. Rate | Converts the line into SGD: SGD per 1 MYR, 1 ÷ 3.2000 = 0.3125. It is the other way round from the rates on Exchange Rates. |
|---|---|
| After posting | The entry is held in SGD. The margin stays at SGD 10,000.00 however MYR moves, as the profit it removes does. |
3Know what happens next month
The list also shows REV-URP-M-D-2026-10, marked Auto reversal and dated 1 November 2026, which adds October’s margin back. At 30 November, work out the margin in Company M’s goods that Company D still holds then, at the rates they were sold at, and enter it as URP-M-D-2026-11 under Nov-2026. Each month’s entry is the whole position, not the change.
Check
On the group’s Balance Sheet for October with Show Entities on, Inventory in the group column is SGD 10,000.00 lower than the companies’ total, and cost of sales on the Profit & Loss is 10,000.00 higher.
More on the entry and its reversal: Remove unrealised profit in inventory.
4If something goes wrong
| What you see | What to do |
|---|---|
| Difference requires treatment | The two sides don’t convert to the same SGD amount. Check the MYR line’s Exch. Rate is SGD per MYR (0.3125), not MYR per SGD (3.2000), and correct it rather than adding a treatment. |
| Unrealised Profit isn’t in the Intercompany menu | It is off in a new group. Switch it on, as in Set up intercompany types for a manufacturing group. |
| Period Nov 2026 is locked. Contact administrator. | The reversal would fall in a locked month. Ask an administrator to unlock November. |
| … cannot be used in this elimination type. | The account isn’t Inventory, Direct Costs or Revenue. Check its type in the company’s chart. |
Want more detail? See the documentation