EXERCISE 2

Let's analyze the scenario presented: The Parent Company manufactured a chair at a cost of 70 PLN and sold it to its own Subsidiary for 100 PLN. Crucially, the chair is still sitting in the Subsidiary's warehouse. On a standalone basis, the Parent Company reports 100 PLN in revenue and a 30 PLN profit. The Subsidiary, on the other hand, reports inventory worth 100 PLN on its balance sheet. Legally and individually, these standalone numbers are correct.

However, consolidated financial statements are not just simple math. A corporate group must be viewed as a single, unified economic entity. Imagine moving a chair from your left pocket to your right pocket. Did you suddenly become 30 PLN richer? Of course not. True profit is only realized when the goods are sold to an outside, third-party customer.

Your task in this challenge is to input negative consolidation eliminations to neutralize this artificial, internal profit. You need to adjust two line items:

First, intercompany revenues. Since the sale happened within the "family," this revenue doesn't actually exist from the group's perspective. What negative amount must you enter in the "Eliminations" column to wipe out the consolidated revenue for this specific transaction?

Second, the value of the chair in the warehouse. The Subsidiary values it at 100 PLN, but the group's actual manufacturing cost was only 70 PLN. That 30 PLN markup is unrealized—it's trapped inside the inventory. What negative adjustment is required to strip away the internal markup and restore the inventory to its true historical cost?

Please enter the correct negative values and check your results. This exercise demonstrates a fundamental rule of consolidated analysis: internal markups are just corporate smoke and mirrors. You must forcefully eliminate them to uncover the genuine value of assets and the true revenue-generating power of the corporate group.