How does the realisation of profit affect the calculation of profit and retained earnings in term of non-controlling interest? i understand the journal entries needed to be recored. i don't understand why unrealised profit is taken from the profit of non-controlling interest in the year the inventory is still on hand and why is it not awarded to the controlling interest when the profit is realised upon sale to a third party? In simple terms, what difference does realisation make other than changing the year the profit is made?