How to Record Intercompany Product Transfers
Transferring inventory from a cultivation entity to a separate retail dispensary entity under common ownership.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Intercompany Receivable - Retail | Asset | 5,000.00 | - |
| Inventory - Cultivation | Asset | - | 5,000.00 |
💡 Accountant's Note
Records the movement of inventory between legal entities at cost. This ensures the cultivation entity reflects the reduction in stock and an equivalent receivable.
Practitioner & Systems Framework
💻 ERP Architecture
Use intercompany transfer clearing accounts to ensure the transaction balances across two separate ledger databases.
⚠️ Audit Flags
Transfer prices not at arm's length or failure to eliminate intercompany balances during consolidation.
📄 Required Documentation
Shipping manifest (Metrc/BioTrack), transfer invoice, and intercompany service agreement.
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Related Journal Entries
Cannabis & Regulated Substances
IRC §280E — Complete Disallowance of Ordinary Business Expenses (Cannabis-Specific Tax Law)
Cannabis & Regulated Substances
§471 Inventory Cost Capitalization — Maximizing COGS for Cultivators Under §280E
Cannabis & Regulated Substances
Biological Assets — Growing Cannabis Plants at Fair Value (IAS 41 for Canadian Companies)
Discussion & Community Questions
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