BUG – Interbranch Transactions Incorrectly Affect P&L and Balance Sheet

[krishpatel-sanskartechnolab]

Information about bug

Interbranch transactions in ERPNext are incorrectly affecting the Profit & Loss Statement and Balance Sheet, leading to inflated revenue and expenses and incorrect interbranch balances.

Steps to Reproduce:
Purchase in Gujarat Branch:
The Gujarat branch purchases goods from a third party.
Interbranch Transaction (Sale from Gujarat to Maharashtra at Cost Price):
The Gujarat branch creates a Sales Invoice.
The Maharashtra branch creates a Purchase Invoice.
Final Sale from Maharashtra to External Customer (with ₹50,000 profit).

Current Behavior (Bug):
The interbranch sale is included in both revenue and expenses in the P&L Statement, inflating financials.
The interbranch balances show up in the Balance Sheet, even though they should be eliminated.
This leads to incorrect profitability reporting and misrepresentation of financial health.

Expected Behavior:
✅ Interbranch transactions should NOT affect revenue or expenses in the P&L statement.
✅ Interbranch balances should be eliminated in the Balance Sheet.
✅ The ₹50,000 profit should only be reflected in the final sale to the third party.

Impact:
Incorrect financial statements
Overstated revenue and expenses
Misleading interbranch balances

Suggested Fix:
Exclude interbranch transactions from financial reports.
Automatically eliminate interbranch transactions in consolidation.
Add an option in report filters to exclude interbranch sales/purchases.

Module

accounts

Version

ERPNext: v15.52.0 (version-15)
Frappe Framework: v15.56.0 (version-15)

Installation method

manual install

Relevant log output / Stack trace / Full Error Message.