Consolidations: Ch 6 - Intragroup transactions: Property, plant and equipment

Question 1

When is there no consolidation journal?

Answer 1

When S sells to P and P sells to third party in the same year

Question 2

Journal entry - S books

S buys land

Answer 2

Land……………..xxx

………Bank………………xxx

Question 3

Journal entry - S books

S sells land to P

Answer 3

Bank…………………………xxx
………Land………………………..xxx
………Profit on sale…………..xxx

Question 4

Journal entry - P books

P buys land

Answer 4

Land……………………………xxx

………Bank………………………..xxx

Question 5

Journal entry - P books

P sells land to third party

Answer 5

Bank………………………………….xxx
……….Land……………………………….xxx
……….Profit on sale………………….xxx

Question 6

Journal entry of unrealised profit in G books

S sells land to P in CURRENT year

Answer 6

Profit on sale……………………xxx

………..Land………………………………xxx

Question 7

Journal entry of unrealised profit in G books

S sells land to P in PRIOR year

Answer 7

Retained earnings - OB…………………………………xxx
…………..Land………………………………………………………… xxx

Question 8

Journal entry of unrealised profit in G books

P sells land to third party in current year

Answer 8

Land………………………………………. xxx

………Profit on sale…………………………xxx

Question 9

Consolidated journal of unrealised profit in G’s books

Answer 9

Retained earnings - OB……………………. xxx

………Profit on sale……………………………………..xxx

Question 10

How do you calculate unrealised profit?

Answer 10

Amount P pays S - Amount S buys land for