The effect of an intragroup sale of inventories in a prior period, where the inventories are still on hand at the end of that prior period, is that a debit consolidation adjustment is made to opening retained earnings.

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When an intragroup sale of inventories occurs in a prior period and the inventories are still on hand at the end of that prior period, a debit consolidation adjustment is made to opening retained earnings to eliminate the unrealized profit on the inventories. This adjustment ensures that the consolidated financial statements reflect the true economic reality of the group's financial position and performance.

The Effect of an Intragroup Sale of Inventories in a Prior