Inter Company Assets and Claims

Introduction to Inter-Company Assets and Claims

However members of a group are separate legal entities, the element of control exercised through the parent, and usually close relations among group members, tend to lead to inter-company trading and other inter-company transactions. In turn this means that a specific asset in one statement of company of financial position could connect to an equal-sized liability in the statement of financial position of other member of similar group.

The principle that underlying the group statement of financial position is that it should present the situation like if all the assets and claims of individual group members were directly the assets and claims of the parent company. Because the parent company cannot owe itself money, in which there are inter-company balances these have to be eliminated while get ready the group statement of financial position.

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