F3 - intercompany trnsaction. Flashcards
how to record the amount of intercompany sales?
added two or more companies’ revenues together and then minus the consolidated revenue = intercompany sales.
when calculate intercompany, what happen to account receivable and payable?
in intercompany method, AR = AP, means company A’s account receivable from company B’s should be the same as account payable of A to B.
explain intercompany inventory/merchandise transaction?
the affiliate companies may sell their inventories to another, and the sales and cost of good should be eliminated prior to preparing consolidated FS.
when the question was asking about what amount of unrealized intercompany profit was eliminated, then what should I to see?
look for parent and sub’s inventory. I should add their inventories up and subtract the consolidated inventory. This is equal the intercompany profit that was eliminated.
how to record account receivable/payable on balance sheet if the company owns less 50% of common stock of a investee?
the total account receivable/payable should report separately.
how to preparing intercompany internal transaction when sub buy parent’s good and then sold to outsider?
the purchase price and selling price is overstated in sub transaction, so the sales and cogs should be reduced by intercompany sales.
explain the intercompany profit on sale of DEPRECIABLE FIXED ASSET?
the gain or loss on the intercompany sale of a depreciable asset is unrealized from a consolidated FS until that depreciated assets is sold to outsider. NOTE: A WORKING JOURNAL ENTRY WILL ELIMINATE INTERCOMPANY GAIN OR LOSS AND ADJUST ASSET AND ACCUMULATED DEPRECIATION TO ORIGINAL BALANCE ON THE DATE OF SALE.
what is intercompany transaction means?
- eliminate 100% of intercompany transaction even % of NCI still exists.
- eliminate 100% intercompany’s account receivable/payable on BS.
- eliminate 100% of intercompany gross profit in ending inventory and fixed assets of parent and subsidiary.
Income statement - eliminate 100% of
a. interest expense/interest income(bonds)
b. gain on sale/depreciation expense (intercompany fixed asset sale.)
c. sales/cost of good sold (intercompany inventory transactions).
How to record account receivable on consolidated FS?
100% of all intercompany balance among members of the consolidated group are eliminated.
what is intercompany bond transaction?
One member of the consolidated group acquired another member’s debt from outsider, that debt will consider to be retired and a gain/loss recognized on consolidated income statement.
when you need to do when inventory has been sold intercompany and CPA asks you to correct the accounts?
when inventory has been sold intercompany and CPA exam required you to correct account, remember to reverse the original intercompany transaction (sales and COGS) and:
- inventory sold to outsiders - CORRECT cogs.
- inventory still on hand - CORRECT ending inventory.
how to preparing BS when there is no consolidation?
the total receivable or payable need to disclose separately.
In intercompany FS, what happened when two companies holding bonds?
the bonds are eliminated and the gain/loss would be included in retained earning.
how to record intercompany inventory?
reverse the original transaction (sales and COGS) and :
Inventory sold to outsiders –> correct cost of good sold.
Inventory still on hands–> correct ending inventory.
How to report intercompany stock dividend on year-end financial statement?
only report the % of unconsolidated (NCI) dividend.
