Inter-company transactions and balances, Financial Accounting

Assignment Help:

INTER-COMPANY TRANSACTIONS AND BALANCES

As the associate company is not consolidated, care should be taken when there are trading transactions and inter-company balances between the investing company and associate company.

The following general approaches should apply:

1) Inter-company sales of inventory and PPE should be ignored and not adjusted for.

2) Incase of unrealized profit on PPE, opening and closing inventories and excess depreciation, then the investing company’s share of these items is not deducted from the group retained profits and also from the investment in associate company appearing in the balance sheet.

If the sale took place in the current year, then the Unrealised profit on PPE and  on closing inventory and excess depreciation are deducted from the investing company share of profit before tax in associate company.

However, if the sale took place in previous financial periods, then the UP on PPE, UP on opening inventory and excess depreciation are deducted from the group retained profits b/d.

NOTE: The accounting treatment is the same  irrespective of the company that made the sale.

3) In the case of inter-company balances, the amount due to or from the associate company will still appear in the final balance sheet as they are not supposed to be cancelled out.

However you may present the amounts due to or from associate company as a separate item from the other receivables or payables.


Related Discussions:- Inter-company transactions and balances

Ticket Id - EM131058373M27, hello, i have got my answer, but i don''t know ...

hello, i have got my answer, but i don''t know the PART C why doesn''t calculate "working capital: 60000"?????? can not find match number in the solution table

Is demand elastic or inelastic , The demand curve for a product is given by...

The demand curve for a product is given by Qxd = 2,000 - 5Px + 0.2Pz, Where, Pz = $500. a. What is the own price elasticity of demand when Px = $120? Is demand elastic or inelasti

Proposed dividends by subsidiary company, Proposed dividends by subsidiary ...

Proposed dividends by subsidiary company If the subsidiary company has proposed some dividends appearing under current liabilities then the dividends are payable to the holding c

Determine the present value of the bonds payable, Mason Co. issued $860,000...

Mason Co. issued $860,000 of 5 year, 13% with interest payable semiannually, at a market (efffective) interest rate of 12% Determine the present value of the bonds payable, using t

During the course you will be required to develop a , During the course you...

During the course you will be required to develop a Course Project having to do with writing notes for a fictitious annual report.

How many shares are now outstanding, 1. Jepsen Corp had the following trans...

1. Jepsen Corp had the following transactions relating to shares of stock: • Issued 1,000 shares • Purchased 100 shares • Re-issued 50 shares • Declared and distributed a 2-1 stock

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd