# Unrealised profit

> Profit one group company has recorded on a sale to another while the buyer still holds the goods.

Source: https://finconsol.com/blog/glossary/unrealised-profit/ (updated 28 October 2026)

## Why does it matter in a group?

When a group company sells goods to another at a profit and the buyer still holds them, the group has not earned that profit yet, because the goods have not left the group. The profit is removed from group profit and from the value of stock at the period end, in full, whatever the ownership percentage.[1](#src-1) It returns in the month the buyer sells the goods outside the group. This is a type of [elimination entry](/blog/glossary/elimination-entry/).

## A small example

Zenvara sells stock that cost GBP 6,000,000 to Palmridge for GBP 8,000,000, a profit of 2,000,000. At month-end Palmridge still holds half. The unrealised profit is half of 2,000,000, which is GBP 1,000,000. It is deducted from group profit and from group stock.

## Sources

## Sources

1. IFRS 10 [Consolidated Financial Statements](https://www.ifrs.org/issued-standards/list-of-standards/ifrs-10-consolidated-financial-statements/), paragraph B86(c).