Advac Ipt-Inventory (Ch.5) Gs 2013
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The Reporting Entity
SubsidiaryFinancialStatements_____ __________ __________ __________ _____
SubsidiaryFinancialStatements_____ __________ __________ __________ _____
ConsolidatedFinancialStatements_____ _____ ____ __________ __________ _____
ConsolidatedFinancialStatements_____ _____ ____ __________ __________ _____
ParentFinancialStatements_____ __________ __________ __________ _____
ParentFinancialStatements_____ __________ __________ __________ _____
Identifiable NAIntangible excess
EliminateReciprocal Account
Down-stream
Up-stream
20
24 24
30 30
204
6
P S
Inventory
CoS Sales
20 20
20 24
Inventory
CoS Sales
24 24
24 30
Profit P = 4 recognized all
Intercompany Transactions
• Consolidated Financial Statement:– "intercompany balances and transaction"
• As if this transaction (IPT-Inventory) had never occured
Intercompany Sales of Inventory
• Profit on IPT-Inventory transaction– Recognized when the merchandise sold to the
third party (outsider).– Deferred when the merchandise still on hand –
(UNREALIZED PROFIT )• The ending inventory will become as the beginning
inventory in the next period. Unrealized profit will be realized (RECOGNIZED PROFIT) when that merchandise (beginning inventory) is sold
30
36 36
30 37,50
306
P S
6
P profit recognized partly, the rest is the
Unrealized Profit
End. Invent S =6 P profit that unrealized = 6/36 x 6 = 1
UnRealized Profit = 1UnRealized Profit = 1
Sales-purchase transactions between P and S as if never happenned (36)
30
36 36
30 37,50
306
P S
6
Unrealized Profit6/36 x 6 = 1
40
48 48
6+36 52,50
408
12
6Unrealized Profit12/48 x 8 = 2
Realized Profit6/36 x 6 = 1
Sales 36 - CoS - 36
CoS 1 - Inventory - 1
Sales 48 - CoS - 48
CoS 2 - Inventory - 2
Investment in S 1 - CoS - 1
Parent Subsidi Adjust & Elim CFS
INCOME STAT
Sales 36 37,5 a. 36 37.5
Cost of Sales 30 30 b. 1 a. 36 25
Gross Profit 6 7,5 12,5
BALANCE SHT
Inventory 6 b 1
a Sales 36 - CoS - 36
b CoS 1 - Inventory - 1
Parent Subsidi debit credit CFS
Sales 48 52,5 a. 48 52.5
Cost of Sales 40 42 b. 2 a 48c 1
35
Gross Profit 8 10.5 17,5
Balance Sheet
Inventory 6 b 2
Investment in S c 1
a Sales 48 - CoS - 48
b CoS 2 - Inventory - 2
c Investment in S 1 - CoS - 1
Adjust & Elim
DOWN-STREAM dan UPSTREAM
P
SThe merchandise (EI) in S
The merchandises (EI) in PURP belongs to PIFS will be effectedNCI share will NOT be effected
URP belongs to SShare of P and NCI will be effected
DS US
Effects of DS & US to ShareParent Subsidiary
80%
Sales 600 300Cost of Sales (300) (180) Gross Profit 300 120Expenses (100) (70) Parent’s separate income 200 Subsidiary Net Income 50
Sales between afiliated company $100,000
UNREALIZED Profit in EI 20,000
Effects of DS & US transactions to NI-S Share
DS
US
NI-S Share
NI-S Share
80% x (50,000) = 40,000
20% x 50,000 = 10,000
80% x (50,000-20,000) = 24,000
20% x (50,000-20,000) = 6,000
P
NCI
P
NCI
P profit is deducted by URP 20,000
How is the impact when the company has the BEGINNING INVENTORY?
DOWNSTREAM-Unrealized ProfitIncome Statement 31 Des 2011
Porter Sorter
90%
Sales 100 50Cost of Sales (60) (25) Gross Profit 40 15Expenses (15) (5) Operating income 25 10 Income from Sorter 9NET INCOME 34 10
P sales incl. transaction with Sorter $15,000 with $6,250 as profit
S Ending inventory incl 40% merchandise from Porter
Entry in Porter’s book 2011
Investment in Sorter 9,000
Income from Sorter 9,000
Income from Sorter 2,500
Investment in Sorter 2,500
IFS = 90% x 10,000 = 9,000
Unrealized Profit 40% x 6,250 = 2,500
DS URP-EI 2011Sot Adjustment & Elim
Pot 90% D C CFSIncome Statement
Sales 100.0 50 a 15.0 135.0 IFS 6.5 c 6.5 - Cost of Sales (60.0) (35) b 2.5 a 15.0 (82.5) Expenses (15.0) (5) (20.0) CNI 32.5 NCI-Share
10%x10,000 (1.0)
CI share 31.5 10 31.5
Balance SheetInventory 7.5 b 2.5
Invest in S xxx c 6.5
DOWNSTREAM- Realized ProfitIncome Statement 31 Des 2012
Porter Sorter
90%
Sales 120 60Cost of Sales (80) (40) Gross Profit 40 20Expenses (20) (5) Operating income 20 15 Income from Sorter 13,5NET INCOME 33.5 15
2010 no transaction between P and S
All beginning Inventory from Porter is sold
Entry on Pot’s book 2012
Investment in Sorter 13,500
Income from Sorter 13,500
Investment in Sorter 2,500
Income from Sorter 2,500
IFS 90% x 15,000 = 13,500
Realized Profit 40% x 6,250 = 2,500
DS URP-EI 2012Sot Adjustment & Elim
Pot 90% D C CFSIncome Statement
Sales 120.0 60 180.0 IFS 16.0 b 16.0 - Cost of Sales (80.0) (40) a 2.5 (117.5) Expenses (20.0) (5) (25.0) CNI 37.5 NCI-Share
10%x15,000 (1.5)
CI share 36.0 15 36.0
Balance SheetInventory 7.5
Invest in S xxx a 2.5 b 16.0
UPSTREAM- UNRealized Profit 2011
During 2011 Sal Co (Subsidiary, 75%) sold its merchandise to Par Co (Parent) $20,000. Cost of sales $7,500. At the end of the year, 40% of that mechandise still on hand.Net Income Sal during 2009 was $50,000
Entries in Par’s book 2011
Investment in Sal 37,500
Income from Sal 37,500
Income from Sal 3,750
Investment in Sal 3,750
IFS 75% x 50,000 = 37,500
Inventory di Par 40% x $20,000 = $8,000Total URP = 40% x ($20,000-$7,500)= $5,000UNRealized Profit 75% x 5,000 = 3,750
US URP-EI 2011Sal Penyesuaian & elim LK
Par 75% D C CFSIncome Statement
Sales 250 150 a 20 380 IFS 33.75 c 33.75 - Cost of Sales (100) (80) b 5 a 20 (165) Expenses (50) (20) (70) CNI 145 NCI-Share
(50,000-5,000)x25% (11.25)
CI share 133.75 50 133.75
Balance SheetInventory 10 b 5
Invest in S xxx c 33.75
UPSTREAM- Realized Profit 2010
2012 No more transactions between
Par and Sal
Par inventory purchased from Sal is sold
Entries in Par’s book 2012
Investment in Sal 45,000
Income from Sal 45,000
Investment in Sal 3,750
Income from Sal 3,750
IFS 75% x 60,000 = 45,000
Realized Profit 75% x 5,000 = 3,750
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