Intercompany Transactions

Question 1

When do you make elimination entries?

Answer 1

Eliminate 100% when consolidating - lack arms length.

Question 2

B/S Eliminations (intercompany)

Answer 2

1. Eliminate all inter company AR and AP
J/E - DR  AP
                      CR AR
DR Bond Payable
                      CR Bond Investment
DR Dividend pay
                      CR   Dividend Receivable
DR Interest Payables
                      CR Interest A/R

Question 3

I/S Eliminations (intercompany)

Answer 3

1. Interest Income/expense bonds and debt
2. Gain on sale or depreciation fix asset transactions
3. SAle & COS inventory transactions

Question 4

Intercompany Inventory Transactions

Answer 4

1. If inventory has been sold to outside - correct COS

2. still on hand correct ending inventory

Question 5

Intercompany Inventory J/E’s

Answer 5

1. Orignial Entires:
   Parent - DR AR 1,100
   CR inter sales 1,100
   DR - inter cos 1,000
   CR inventory - 1,000
   Facts - 660 (60%)End Inventory COS 440 (40%) Eliminate PROFIT!!! (100)

J/E eliminate from parent
Intercompany sales 1,100
inter COS 1,000
Inventory - sub 60
COS - sub 40