Intercompany Profit Calculator
Calculate intercompany transfer profit, unrealized profit in closing inventory, and realized group profit when inventory is sold to external customers. Useful for understanding intercompany transactions and consolidation adjustments.
Intercompany Transaction Details
Example: 100 units transferred from one group company to another.
Example: ₹600 per unit — the original cost to the group before the intercompany sale.
Example: ₹800 per unit — the price charged by the selling group entity to the buying entity.
Example: 70 units — quantity sold by the buying entity to external customers by the reporting date.
Example: ₹1,000 per unit — the price charged to customers outside the group.
This calculator assumes all transferred units have the same original cost and transfer price. The quantity sold externally cannot exceed the quantity transferred. It assumes no additional selling costs, inventory write-downs, or other adjustments.
Practical Example
Company A manufactures 100 units at an original group cost of ₹600 per unit and transfers them to Company B for ₹800 per unit. Company B sells 70 units to external customers for ₹1,000 per unit. The remaining 30 units are still in group inventory at the reporting date.
Total original group cost: 100 × ₹600 = ₹60,000
Total intercompany transfer value: 100 × ₹800 = ₹80,000
Total intercompany transfer profit: 100 × (₹800 − ₹600) = ₹20,000
Unrealized profit in closing inventory: 30 × (₹800 − ₹600) = ₹6,000
External sales revenue: 70 × ₹1,000 = ₹70,000
Original group cost of external units sold: 70 × ₹600 = ₹42,000
Realized group profit: ₹70,000 − ₹42,000 = ₹28,000
Formulas Used
Intercompany profit per unit: Transfer price per unit − Original group cost per unit.
Total intercompany transfer profit: Intercompany profit per unit × Total quantity transferred.
Closing inventory quantity: Quantity transferred − Quantity sold externally.
Unrealized profit: Intercompany profit per unit × Closing inventory quantity.
Realized group profit: (External selling price per unit − Original group cost per unit) × Quantity sold externally.
Note: This calculator provides a simplified inventory consolidation estimate. Actual consolidation may require adjustments for tax effects, inventory write-downs, different profit margins, prior-period unrealized profit, and the direction of the intercompany transaction. It assumes the original group cost is the relevant cost for the consolidated group and that all units are homogeneous.