Intercompany Transactions and Balances- Introduction

Question 1

T/F: All intercompany transactions have to be eliminated?

Answer 1

True

Question 2

Tools:

Answer 2

• Diagrams
• Journal Entries
• Should-be-is difference table

Question 3

In a intercompany payable/Receivable, what amounts are eliminated?

Answer 3

A/P, A/R, Income, and the Expense. The movement of cash is fine.

Question 4

T/F: You do not not need to eliminate intercompany transactions for those companies in which you own less than 50%?

Answer 4

True- You only eliminate when you consolidate or control another company