Scribd
Upload
35 views13 pages

CH5 - Chapter 18 Consolidated FS - Part 2

Uploaded by

vela.aromaticaa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
35 views13 pages

CH5 - Chapter 18 Consolidated FS - Part 2

Uploaded by

vela.aromaticaa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 13

(Advanced Financial

Accounting and Reporting


Part 2)
LECTURE AID

2017

ZEUS VERNON B. MILLAN

AFAR PART 2: Zeus Vernon B. Millan


Chapter 18 CONSOLIDATED FS (Part 2)

Learning Objectives

• Prepare the consolidated financial


statements eliminating the effects of
intercompany transactions.

AFAR PART 2: Zeus Vernon B. Millan


Intercompany sale of Inventory

Unrealized gross profit in ending inventory

AFAR PART 2: Zeus Vernon B. Millan


Intercompany sale of Inventory

Consolidated Sales

AFAR PART 2: Zeus Vernon B. Millan


Intercompany sale of Inventory

Consolidated Cost of Sales

AFAR PART 2: Zeus Vernon B. Millan


Intercompany sale of Inventory

Consolidated Ending Inventory

AFAR PART 2: Zeus Vernon B. Millan


Intercompany sale of PPE

Consolidated PPE

AFAR PART 2: Zeus Vernon B. Millan


Intercompany sale of PPE

Consolidated Depreciation Expense

AFAR PART 2: Zeus Vernon B. Millan


Intercompany Dividends

The dividends must be eliminated when the consolidated


financial statements are prepared. It is as if the parent never
received the dividends. Therefore:
• If the dividends were recognized in profit or loss (if the
investment is measured at cost or at fair value), eliminate the
dividend income in the consolidated statement of profit or
loss.
• If the dividends were recognized as reduction to the
investment account (if the investment is measured using
the equity method), add back the dividends to the investment
account. AFAR PART 2: Zeus Vernon B. Millan
Intercompany Bond transaction

• When a parent or a subsidiary acquires bonds issued by


the other, both the investment in bonds and the bonds
payable are eliminated in the consolidated financial
statements.
• The bonds payable are considered extinguished from
the group’s point of view.
• Any interest expense/interest income recognized by the
parent and the subsidiary on each other is eliminated
in the consolidated financial statements.
AFAR PART 2: Zeus Vernon B. Millan
• (APPLICATION: PROBLEM 17-2: #’s 1 – 4)

AFAR PART 2: Zeus Vernon B. Millan


 QUESTIONS????
 REACTIONS!!!!!

AFAR PART 2: Zeus Vernon B. Millan


IFA PART 1A: Zeus Vernon B. Millan
END

AFAR PART 2: Zeus Vernon B. Millan

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy