irwin/mcgraw-hill © 2001 by the mcgraw-hill companies, inc. all rights reserved. 7-1 intercompany...
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Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-11
Intercompany Inventory Transactions 7
Electronic Presentation by Douglas Cloud
Pepperdine University
Baker / Lembke / KingBaker / Lembke / King
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7-7-22
Transactions of Affiliated CompaniesTransactions of Affiliated Companies
• Inventory transactions are the most common form of intercorporate exchange.
• Significantly, the consolidation procedures relating to inventory transfers are quite similar to fixed assets.
• The eliminations ensure that only the historical cost of the inventory to the consolidated entity is included in the consolidated balance sheet when the inventory is still on hand and is charged to cost of goods sold in the period the inventory is resold to nonaffiliates.
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-33Transactions of Affiliated CompaniesTransactions of Affiliated Companies
Parent Company
Parent Company
Subsidiary A
Subsidiary A
Subsidiary B
Subsidiary B
Consolidated EntityConsolidated Entity
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7-7-44Aspects of Workpaper EliminationAspects of Workpaper Elimination
When intercorporate sales include profits or losses, there are two aspects
of the workpaper elimination needed in the period of transfer to prepare
consolidated financial statements.
When intercorporate sales include profits or losses, there are two aspects
of the workpaper elimination needed in the period of transfer to prepare
consolidated financial statements.
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7-7-55
Elimination of the income statement effects of the intercorporate sale in the period in which the sale occurs, including the sales revenue from the intercorporate sale and the related cost of goods sold recorded by the transferring affiliate.
Elimination from the inventory on the balance sheet of any profit or loss on the intercompany sale that has not been confirmed by resale of the inventory to outsiders.
Elimination of the income statement effects of the intercorporate sale in the period in which the sale occurs, including the sales revenue from the intercorporate sale and the related cost of goods sold recorded by the transferring affiliate.
Elimination from the inventory on the balance sheet of any profit or loss on the intercompany sale that has not been confirmed by resale of the inventory to outsiders.
Aspects of Workpaper EliminationAspects of Workpaper Elimination
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7-7-66
Downstream Sale–Perpetual System
• Consolidated net income must be based on the realized income of the transferring affiliate.
• Because intercompany profits from downstream sales are on the books of the parent, consolidated net income and the overall claim of parent company shareholders must be reduced by the full amount of the unrealized profits.
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7-7-77
PT IndukPT Induk
Consolidated EntityConsolidated Entity
March 1, 20X1
Purchased inventory for Rp7,000,000
Downstream Sale -- Perpetual InventoryDownstream Sale -- Perpetual Inventory
PT AnakPT Anak
PT IndukPT IndukPT IndukPT Induk
Mar. 1 Inventory 7,000,000Cash 7,000,000
Purchase of inventory.
Mar. 1 Inventory 7,000,000Cash 7,000,000
Purchase of inventory.
Same PeriodSame Period
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7-7-88
PT IndukPT Induk PT AnakPT Anak
Consolidated EntityConsolidated Entity
April 1, 20X1
Intercorporate transfer of inventory
Rp10,000,000
Downstream Sale -- Perpetual InventoryDownstream Sale -- Perpetual Inventory
PT IndukPT IndukPT IndukPT Induk
Apr. 1 Cash 10,000,000Sales 10,000,000
Sale of inventory to PT Anak.
Apr. 1 Cash 10,000,000Sales 10,000,000
Sale of inventory to PT Anak.
PT IndukPT IndukPT IndukPT Induk
Apr. 1 Cost of Goods Sold 7,000,000Inventory 7,000,000
Cost of inventory sold to PT Anak.
Apr. 1 Cost of Goods Sold 7,000,000Inventory 7,000,000
Cost of inventory sold to PT Anak.
PT AnakPT AnakPT AnakPT Anak
Apr. 1 Inventory 10,000,000Cash 10,000,000
Purchase of inventory from PT Induk.
Apr. 1 Inventory 10,000,000Cash 10,000,000
Purchase of inventory from PT Induk.
Same PeriodSame Period
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-99
PT IndukPT Induk PT AnakPT Anak
Consolidated EntityConsolidated Entity
Downstream Sale -- Perpetual InventoryDownstream Sale -- Perpetual Inventory
Nov. 5, 20X1
Sell inventory for Rp15,000,000
PT AnakPT AnakPT AnakPT Anak
Nov. 5 Cash 15,000,000Sales 15,000,000
Sale of inventory to Nonaffiliated.
Nov. 5 Cash 15,000,000Sales 15,000,000
Sale of inventory to Nonaffiliated.
PT AnakPT AnakPT AnakPT Anak
Nov. 5 Cost of Goods Sold 10,000,000Inventory 10,000,000
Cost of inventory sold to Nonaffiliated.
Nov. 5 Cost of Goods Sold 10,000,000Inventory 10,000,000
Cost of inventory sold to Nonaffiliated.
Same PeriodSame Period
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-1010Downstream Sale -- Perpetual InventoryDownstream Sale -- Perpetual Inventory
Item PT Induk PT Anak Unadjusted Consolidated Totals Amounts
Sales Rp10,000,000 Rp15,000,000 Rp25,000,000 Rp15,000,000
Cost of goods
sold -7,000,000 -10,000,000 -17,000,000 -7,000,000
Gross profit Rp 3,000,000 Rp 5,000,000 Rp 8,000,000 Rp 8,000,000
20X120X1
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-1111Downstream Sale -- Perpetual InventoryDownstream Sale -- Perpetual Inventory
Gross profit of Rp8,000,000 is correct from a consolidated viewpoint, but consolidated sales and cost of goods sold should be Rp15,000,000 and Rp7,000,000 respectively, rather than Rp25,000,000 and Rp17,000,000. In the consolidation workpaper, the intercompany sale must be eliminated.
Gross profit of Rp8,000,000 is correct from a consolidated viewpoint, but consolidated sales and cost of goods sold should be Rp15,000,000 and Rp7,000,000 respectively, rather than Rp25,000,000 and Rp17,000,000. In the consolidation workpaper, the intercompany sale must be eliminated.Sales 10,000,000
Cost of goods sold 10,000,000Eliminate intercompany inventory sale.
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-1212Resale in Period Following TransferResale in Period Following Transfer
PT IndukPT Induk
Consolidated EntityConsolidated Entity
March 1, 20X1
Purchased inventory for Rp7,000,000
PT AnakPT AnakApril 1,
20X1
Inter-corporate transfer of inventory
Rp10,000,000
January 2, 20X2
Sell inventory
for Rp15,000,000
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-1313Basic Equity-Method Entries--20X1Basic Equity-Method Entries--20X1
During 20X1, PT Induk records its pro rata portion of PT Anak’ net income and dividends for 20X1:
During 20X1, PT Induk records its pro rata portion of PT Anak’ net income and dividends for 20X1:
(9) Investment in PT Anak Stock 40,000,000Income from Subsidiary 40,000,000
Record equity-method income.
(8) Cash 24,000,000Investment in PT Anak Stock 24,000,000
Record dividends from PT Anak.Rp30,000,000 Rp30,000,000
x .80x .80
Rp50,000,000 Rp50,000,000 x .80x .80
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7-7-1414
Income from Subsidiary 40,000
Dividends Declared (60,000) (30,000)
Investment in PT Anak 256,000
Consolidation Workpaper--20X1Consolidation Workpaper--20X1 (in ‘000) (in ‘000)
Income from Subsidiary 40,000
Dividends Declared (60,000) (30,000)
Investment in PT Anak 256,000
An entry is needed to eliminate PT Induk’s share of PT Anak’ income and dividends. This
entry also eliminates the change in the investment account for the period.
An entry is needed to eliminate PT Induk’s share of PT Anak’ income and dividends. This
entry also eliminates the change in the investment account for the period.
Income from Subsidiary 40,000 (l0) 40,000
Dividends Declared (60,000) (30,000) (10) 24,000
Investment in PT Anak 256,000 (10) 16,000
PT Induk PT Anak Eliminations Item Debits Credits Consolidated
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-1515
The noncontrolling interest is assigned a pro rata portion of the net income of PT Anak. Also, the noncontrolling stockholders’
share of PT Anak’ dividends is eliminated and the noncontrolling interest is increased to reflect the excess of PT
Anak’ income over its dividends.
The noncontrolling interest is assigned a pro rata portion of the net income of PT Anak. Also, the noncontrolling stockholders’
share of PT Anak’ dividends is eliminated and the noncontrolling interest is increased to reflect the excess of PT
Anak’ income over its dividends.
Income to Non- controlling Interest
Dividends Declared (60,000) (30,000) 24,000
Noncontrolling Interest
Consolidation Workpaper--20X1Consolidation Workpaper--20X1 (in ‘000) (in ‘000)
Income to Non- controlling Interest
Dividends Declared (60,000) (30,000) (10) 24,000
Noncontrolling Interest
(11) 10,000 (10,000)
(11) 6,000 (60,000)
(11) 4,000
PT Induk PT Anak Eliminations Item Debits Credits Consolidated
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-1616
Retained Earnings, January 1 300,000 100,000
Investment in PT Anak 256,000 (10) 16,000
Common Stock-- PT Anak 500,000 200,000Noncontrolling Interest (11) 4,000
An entry is needed to eliminate the beginning balances of PT Anak’ stockholders’ equity accounts and PT Induk’s investment account. This entry
also needs to establish the noncontrolling interest at the beginning of the period.
An entry is needed to eliminate the beginning balances of PT Anak’ stockholders’ equity accounts and PT Induk’s investment account. This entry
also needs to establish the noncontrolling interest at the beginning of the period.
,(12)100,000 300,000
(12) 240,000
(12)200,000 500,000
(12) 60,000 64,000
Consolidation Workpaper--20X1Consolidation Workpaper--20X1 (in ‘000) (in ‘000)
PT Induk PT Anak Eliminations Item Debits Credits Consolidated
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-1717Downstream Sale -- Inventory Not ResoldDownstream Sale -- Inventory Not Resold
Item PT Induk PT Anak Unadjusted Consolidated Totals Amounts
Sales Rp10,000,000 Rp -0- Rp10,000,000 Rp -0-
Cost of goods
sold -7,000,000 -0- -7,000,000 -0-
Gross profit Rp 3,000,000 Rp -0- Rp 3,000,000 Rp -0-
Inventory Rp -0- Rp10,000,000 Rp10,000,000 Rp7,000,000
20X120X1
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-1818
Sales 400,000 200,000
Cost of Goods Sold 170,000 115,000
Inventory 100,000 75,000
An entry is required to eliminate the effects of the intercompany sale of inventory.
An entry is required to eliminate the effects of the intercompany sale of inventory.
(13) 10,000 590,000
(13) 7,000 278,000
(13) 3,000 172,000
Consolidation Workpaper--20X1Consolidation Workpaper--20X1 (in ‘000) (in ‘000)
PT Induk PT Anak Eliminations Item Debits Credits Consolidated
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-1919Consolidated Net Income--20X1Consolidated Net Income--20X1
PT Induk’s separate operating income Rp140,000,000 Less: Unrealized intercompany profit
on downstream inventory sale -3,000,000PT Induk’s separate realized income Rp137,000,000 PT Induk’s share of PT Anak’ income:
PT Anak’s net income Rp50,000,000PT Induk’s proportionate share x .80 40,000,000
Consolidated net income, 20X1 Rp177,000,000
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-2020Basic Equity-Method Entries--20X2Basic Equity-Method Entries--20X2
During 20X2, PT Induk records its pro rata portion of PT Anak’ net income and dividends for 20X2:
During 20X2, PT Induk records its pro rata portion of PT Anak’ net income and dividends for 20X2:
(15) Investment in PT Anak Stock 60,000,000Income from Subsidiary 60,000,000
Record equity-method income.
(14) Cash 32,000,000Investment in PT Anak Stock 32,000,000
Record dividends from PT Anak.Rp40,000,000 Rp40,000,000
x .80x .80
Rp75,000,000 Rp75,000,000 x .80x .80
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7-7-2121
Income from Subsidiary 60,000
Dividends Declared (60,000 (40,000)
Investment in PT Anak 284,000
An entry is needed to eliminate the effects of income from PT Anak and from PT
Induk’s share of dividends.
An entry is needed to eliminate the effects of income from PT Anak and from PT
Induk’s share of dividends.
(16) 60,000
(16) 32,000
(16) 28,000
Consolidation Workpaper--20X2Consolidation Workpaper--20X2 (in ‘000) (in ‘000)
)
PT Induk PT Anak Eliminations Item Debits Credits Consolidated
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-2222
Income to Noncontrolling Interest
Dividends Declared (60,000) (40,000) (16) 32,000
Noncontrolling Interest
An entry is needed to assign the noncontrolling shareholders their share of income and establish the
20X2 increase in the claim of noncontrolling shareholders on the net assets of PT Anak.
An entry is needed to assign the noncontrolling shareholders their share of income and establish the
20X2 increase in the claim of noncontrolling shareholders on the net assets of PT Anak.
Consolidation Workspaper--20X2Consolidation Workspaper--20X2 (in ‘000) (in ‘000)
(17)15,000 (15,000)
(17) 8,000 (60,000)
(17) 7,000
PT Induk PT Anak Eliminations Item Debits Credits Consolidated
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-2323
A workpaper entry is needed to eliminate the beginning stockholders’ equity balances of PT Anak and PT
Induk’s beginning investment balance.
A workpaper entry is needed to eliminate the beginning stockholders’ equity balances of PT Anak and PT
Induk’s beginning investment balance.
Retained Earnings, January 1 420,000 120,000
Investment in PT Anak 284,000 (16) 28,000
Common Stock 500,000 200,000
Noncontrolling Interest (17) 7,000
(18)120,000 420,000
(18)256,000(18)200,000 500,000
(18) 64,000 71,000
Consolidation Workpaper--20X2Consolidation Workpaper--20X2 (in ‘000) (in ‘000)
PT Induk PT Anak Eliminations Item Debits Credits Consolidated
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-2424Downstream Sale -- Inventory Not ResoldDownstream Sale -- Inventory Not Resold
Item PT Induk PT Anak Unadjusted Consolidated Totals Amounts
Sales Rp -0- Rp 15,000,000 Rp15,000,000 Rp 15,000,000
Cost of goods
sold -0- (10,000,000) (10,000,000) (7,000,000)
Gross profit Rp -0- Rp 5,000,000 Rp 5,000,000 Rp 8,000,000
20X220X2
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-2525
An entry is required to eliminate beginning inventory profit.
An entry is required to eliminate beginning inventory profit.
Cost of Goods Sold 180,000 160,000
Retained Earnings, January 1 420,000 120,000 (18)120,000
Consolidation Workpaper--20X2Consolidation Workpaper--20X2 (in ‘000) (in ‘000)
(19) 3,000 337,000
(19) 3,000 417,000
PT Induk PT Anak Eliminations Item Debits Credits Consolidated
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-2626Consolidated Net Income--20X2Consolidated Net Income--20X2
PT Induk’s separate incomeRp160,000,000
Realization of deferred intercompany profit 3,000,000
PT Induk’s separate realized incomeRp163,000,000
PT Induk’s share of PT Anak’s income:PT Anak’ net income Rp75,000,000PT Induk’s proportionate share x .80 60,000,000
Consolidated net income, 20X2Rp223,000,000
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-2727
If Inventory Held > 2 periods
Retained Earnings xxx
Inventory xxx
For Previous PT Induk Case:
Retained Earnings 3,000,000
Inventory 3,000,000
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7-7-2828
Upstream Sale–Perpetual System• When an upstream sale of inventory occurs and
the inventory is resold by the parent to a nonaffiliate during the same period– All the eliminating entries in the consolidation work
paper are identical to those in the downstream case.
• When the inventory is not resold to a nonaffiliate before the end of the period– work paper eliminating entries are different from
the downstream case only by the apportionment of the unrealized intercompany profit to both the controlling and noncontrolling interests.
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-2929Upstream Sale--Perpetual InventoryUpstream Sale--Perpetual Inventory
PT IndukPT Induk
Consolidated EntityConsolidated Entity
March 1, 20X1
Purchased inventory for Rp7,000,000
PT AnakPT AnakApril 1,
20X1
Inter-corporate transfer of inventory
Rp10,000,000
Jan. 2 20X2
Sell inventory for
Rp15,000,000
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-3030Basic Equity--Method Entries--20X1Basic Equity--Method Entries--20X1
(22) Investment in PT Anak Stock 40,000,000
Income from Subsidiary 40,000,000 Record equity-method income.
(21) Cash 24,000,000Investment in PT Anak
Foods Stock 24,000,000 Record dividends from PT Anak.
Rp50,000,000 Rp50,000,000 x .80x .80
Rp50,000,000 Rp50,000,000 x .80x .80
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-3131Consolidation Workpaper--20X1Consolidation Workpaper--20X1 (in ‘000) (in ‘000)
An entry is needed to eliminate the effects of income from PT Anak and from PT
Induk’s share of dividends.
An entry is needed to eliminate the effects of income from PT Anak and from PT
Induk’s share of dividends.
Income from Subsidiary 40,000
Dividends Declared (60,000 (30,000)
Investment in PT Anak 256,000
(23) 40,000
(23) 24,000
(23) 16,000
)
PT Induk PT Anak Eliminations Item Debits Credits Consolidated
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-3232
The noncontrolling interest is assigned a pro rata portion of the net income of PT Anak. Also, the noncontrolling stockholders’
share of PT Anak’ dividends is eliminated and the noncontrolling interest is increased to reflect the excess of PT
Anak’ income over its dividends.
The noncontrolling interest is assigned a pro rata portion of the net income of PT Anak. Also, the noncontrolling stockholders’
share of PT Anak’ dividends is eliminated and the noncontrolling interest is increased to reflect the excess of PT
Anak’ income over its dividends.
Income to Non- controlling Interest
Dividends Declared (60,000) (30,000) 24,000
Noncontrolling Interest
Income to Non- controlling Interest
Dividends Declared (60,000) (30,000) (23) 24,000
Noncontrolling Interest
Consolidation Workpaper--20X1Consolidation Workpaper--20X1 (in ‘000) (in ‘000)
-
(24) 9,400 (9,400)
(24) 6,000 (60,000)
(24) 3,400
PT Induk PT Anak Eliminations Item Debits Credits Consolidated
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-3333
Retained Earnings, January 1 300,000 100,000
Investment in PT Anak 256,000 (23) 16,000
Common Stock 500,000 200,000Noncontrolling Interest (24) 3,400
An entry is needed to eliminate the beginning balances of PT Anak’ stockholders’ equity accounts and PT Induk’s
investment account. This entry also needs to establish the noncontrolling interest at the beginning of the period.
An entry is needed to eliminate the beginning balances of PT Anak’ stockholders’ equity accounts and PT Induk’s
investment account. This entry also needs to establish the noncontrolling interest at the beginning of the period.
Consolidation Workpaper--20X1Consolidation Workpaper--20X1 (in ‘000) (in ‘000)
(25)100,000 300,000
(25) 240,000(25)200,000 500,000
(25) 60,000 63,400
PT Induk PT Anak Eliminations Item Debits Credits Consolidated
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-3434
An entry is required to eliminate the intercompany upstream sale of inventory.
An entry is required to eliminate the intercompany upstream sale of inventory.
Consolidation Workpaper--20X1Consolidation Workpaper--20X1 (in ‘000) (in ‘000)
Sales 400,000 200,000
Cost of Goods Sold 170,000 115,000
Inventory 100,000 75,000
(26)10,000 590,000
(26) 7,000 278,000
(26) 3,000 172,000
PT Induk PT Anak Eliminations Item Debits Credits Consolidated
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-3535Consolidated Net Income--20X1Consolidated Net Income--20X1
PT Induk’s separate operating income Rp140,000,000PT Induk’s share of PT Anak’ income:
PT Anak’s net income Rp50,000,000 Less: Unrealized intercompany profit on upstream inven-
tory sale -3,000,000PT Anak’ realized income Rp47,000,000 PT Induk’s proportionate share x .80 37,600,000
Consolidated net income, 20X1 Rp177,600,000
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-3636Basic Equity--Method Entries--20X2Basic Equity--Method Entries--20X2
(28) Investment in PT Anak Stock 60,000,000
Income from Subsidiary 60,000,000 Record equity-method income.
(27) Cash 32,000,000Investment in PT Anak Stock 32,000,000
Record dividends from PT Anak.Rp75,000,000 Rp75,000,000
x .80x .80
Rp75,000,000 Rp75,000,000 x .80x .80
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-3737Consolidation Workpaper--20X2Consolidation Workpaper--20X2 (in ‘000) (in ‘000)
An entry is needed to eliminate the effects of income from PT Anak and from PT
Induk’s share of dividends.
An entry is needed to eliminate the effects of income from PT Anak and from PT
Induk’s share of dividends.
Income from Subsidiary 60,000
Dividends Declared (60,000 (40,000)
Investment in PT Anak 284,000
(29) 60,000
(29) 32,000
(29) 28,000
)
PT Induk PT Anak Eliminations Item Debits Credits Consolidated
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-3838
Income to Noncontrolling Interest
Dividends Declared (60,000) (40,000) (29) 32,000
Noncontrolling Interest
An entry is needed to assign the noncontrolling shareholders their share of income and establish the
20X2 increase in the claim of noncontrolling shareholders on the net assets of PT Anak.
An entry is needed to assign the noncontrolling shareholders their share of income and establish the
20X2 increase in the claim of noncontrolling shareholders on the net assets of PT Anak.
(30)15,600 (15,600)
(30) 8,000 (60,000)
(30) 7,600
Consolidation Workpaper--20X2Consolidation Workpaper--20X2 (in ‘000) (in ‘000)
PT Induk PT Anak Eliminations Item Debits Credits Consolidated
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-3939
A workpaper entry is needed to eliminate the beginning stockholders’ equity balances of PT Anak and PT
Induk’s beginning investment balance.
A workpaper entry is needed to eliminate the beginning stockholders’ equity balances of PT Anak and PT
Induk’s beginning investment balance.
Retained Earnings, January 1 420,000 120,000
Investment in PT Anak 284,000 (29) 28,000
Common Stock 500,000 200,000
Noncontrolling Interest (30) 7,600
(31)120,000 420,000
(31)256,000(31)200,000 500,000
(31) 64,000
Consolidation Workpaper--20X2Consolidation Workpaper--20X2 (in ‘000) (in ‘000)
PT Induk PT Anak Eliminations Item Debits Credits Consolidated
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-4040
PT Induk PT Anak Eliminations Item Debits Credits Consolidated
A workpaper entry is needed to eliminate the beginning inventory profit: Rp3,000,000 x .80 and Rp3,000,000 x
.20.
A workpaper entry is needed to eliminate the beginning inventory profit: Rp3,000,000 x .80 and Rp3,000,000 x
.20.
Cost of Goods Sold 180,000 160,000
Retained Earnings, January 1 420,000 120,000 (31) 120,000
Noncontrolling Interest (30) 7,600
(31) 64,000
(32) 3,000 337,000
(32) 2,400 417,600
(32) 60071,000
Consolidation Workpaper--20X2Consolidation Workpaper--20X2 (in ‘000) (in ‘000)
Irwin/McGraw-Hill ©2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7-4141Consolidated Net Income--20X2Consolidated Net Income--20X2
PT Induk’s separate operating income Rp160,000,000PT Induk’s share of PT Anak’ income:
PT Anak’s net income Rp75,000,000 Realized intercompany profit
on upstream inventory sale 3,000,000PT Anak’ realized income Rp78,000,000 PT Induk’s proportionate share x .80 62,400,000
Consolidated net income, 20X2 Rp222,400,000
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