I/C Transactions and Balances - Introduction

Question 1

What are the primary types of I/C Transactions and related I/C balances?

Answer 1

1. ) Receivables/Payables
2. ) Revenues/expenses
3. ) Inventory
4. ) Fixed Assets
5. ) Bonds

Question 2

What types of transactions with other entities must be eliminated in Consolidated Financials?

Answer 2

1. ) Transactions between a parent and its subs

2. ) Transactions between affiliated entities

Question 3

What do intercompany receivables and payables result from?

Answer 3

One affiliated company providing goods or services to another affiliated company and permitting the buying affiliate to “charge” the amount owed

Question 4

What are typical AR/AP intercompany accounts?

Answer 4

1. ) Accounts Receivable/Payable - 100% must be eliminated
2. ) Loan Receivable/Loan Payable
3. ) Interest Payable/Interest Receivable - 100% must be eliminated
4. ) Dividends Receivable (100% eliminated)/Dividends Payable (Intercompany %)

Question 5

What do intercompany revenues and expenses result from?

Answer 5

From one affiliated company providing services for a fee to another affiliated company.

Question 6

What are typical intercompany revenues and expense accounts?

Answer 6

1. ) Management Services Expense/Management Services revenue (100% eliminated)
2. ) Interest Expense/Interest Revenue (100% eliminated)