Ch2. More Group Accounts Flashcards
Double entry to eliminate balances between group accounts
Dr Intragroup Payables (reduce)
Cr Intragroup Receivables (reduce)
Double entry to push forward an in transit cash transaction (we are receiving the cash)
Dr cash (increase) Cr Receivables (decrease)
Double entry to push forward in transit goods (that we are receiving)
Dr Inventories (increase) Cr Payables (decrease)
What are the adjustments required to eliminate intragroup loans?
- Cancel intracompany loan in the group accounts
2. Cancel any intracompany interest payable in the group accounts.
Double entry to cancel intracompany loans in group accounts
Dr loan payable (decrease)
Cr loan receivable (decrease)
Double entry to cancel any intracompany interest payable in the group accounts
Dr finance income (P&L) (decrease)
Cr finance costs/expense (P&L) (decrease)
PUP
Provision of unrealised profit.
An adjustment made to remove any unrealised profit between intracompany transactions and to ensure that inventories are shown @ cost to the group
Double entry for PUP adjustment when inventory is sitting in stock at year end
Dr selling company retained earnings (decrease)
Cr group inventories (decrease)
How to calculate the PUP amount for inventories
Profit on intracompany sale MULTIPLIED by % of goods still in inventory at the year end
What are the problems that arise in the transfer of PPE between a group?
- Profit on sale unrealised
- Depreciation will be charged on new, higher carrying amount (over-depreciating)
Double entry for PUP adjustment in the transfer of intracompany PPE
Dr selling company retained earnings (decrease) Cr PPE (decrease)
How to calculate the PUP amount for PPE
Original profit on transfer LESS additional depreciation
How to calculate additional depreciation
Profit DIVIDED by remaining useful economic life
