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    Afar-11 Notes - Intercompany Sales of Fixed Assets

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    Vincent Luigil Alcera
    This document discusses accounting for intercompany sales of fixed assets between a parent company and subsidiary in three key areas: 1. The effects of intercompany sales on the financial statements of the parent and subsidiary in the year of sale and subsequent years. Gains or losses are realized in the year of sale and adjustments may be needed in later periods. 2. Differences in accounting when the fixed asset sold is depreciable versus non-depreciable. For non-depreciable assets, any gain is closed out at year-end in the year of sale. 3. Calculation of a subsidiary's net income and how it flows into the parent company's investment account and separate vs. consolidated financial statements

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    Afar-11 Notes - Intercompany Sales of Fixed Assets

    Uploaded by

    Vincent Luigil Alcera
    81 views1 page
    This document discusses accounting for intercompany sales of fixed assets between a parent company and subsidiary in three key areas: 1. The effects of intercompany sales on the financial statements of the parent and subsidiary in the year of sale and subsequent years. Gains or losses are realized in the year of sale and adjustments may be needed in later periods. 2. Differences in accounting when the fixed asset sold is depreciable versus non-depreciable. For non-depreciable assets, any gain is closed out at year-end in the year of sale. 3. Calculation of a subsidiary's net income and how it flows into the parent company's investment account and separate vs. consolidated financial statements

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    AFAR-11 NOTES_INTERCOMPANY SALES OF FIXED ASSETS

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    This document discusses accounting for intercompany sales of fixed assets between a parent company and subsidiary in three key areas: 1. The effects of intercompany sales on the financial statements of the parent and subsidiary in the year of sale and subsequent years. Gains or losses are realized in the year of sale and adjustments may be needed in later periods. 2. Differences in accounting when the fixed asset sold is depreciable versus non-depreciable. For non-depreciable assets, any gain is closed out at year-end in the year of sale. 3. Calculation of a subsidiary's net income and how it flows into the parent company's investment account and separate vs. consolidated financial statements

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    81 views1 page

    Afar-11 Notes - Intercompany Sales of Fixed Assets

    Uploaded by

    Vincent Luigil Alcera
    This document discusses accounting for intercompany sales of fixed assets between a parent company and subsidiary in three key areas: 1. The effects of intercompany sales on the financial statements of the parent and subsidiary in the year of sale and subsequent years. Gains or losses are realized in the year of sale and adjustments may be needed in later periods. 2. Differences in accounting when the fixed asset sold is depreciable versus non-depreciable. For non-depreciable assets, any gain is closed out at year-end in the year of sale. 3. Calculation of a subsidiary's net income and how it flows into the parent company's investment account and separate vs. consolidated financial statements

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    © All Rights Reserved
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    of 1

    ADVANCED FINANCIAL ACCOUNTING AND REPORTING

    AFAR-11 | INTERCOMPANY SALES OF FIXED ASSETS

    - these should not have occurred since the parent and subsidiary are one

    - effect on the year of sale

    - effect on the ff. year

    - effect two years later

    - 2029

    - same entries for downstream and upstream


    → only during the year of sale
    - upstream → NCI affected
    - 2030

    - NON-DEPRECIABLE ASSET

    - subsequent year
    RE debited because gain was closed at year-end in the previous period

    - problem 1

    Net assets of subsidiary = 300K + 400K (100%)

    - cost model
    - only impairment affects the investment account
    - investment account and dividend income
    = eliminated from the conso-FS

    - Equity in Subsidiary’s Net Income


    → only in separate FS; eliminated in conso-FS
    Investment
    ESNI

    - less investment income


    - if the income of parent contains the ff.
    1. Dividend Income (cost method)
    2. ESNI

    - 70K SNI = unadjusted; undervaluation also adjusted

    - UG = only in year of sale


    - AG = brought each year
    - consider if there is a share in impairment
    → not always equal to share in subsidiary
    - GW
    = not part of ESNI; only shown in conso-FS

    - ESNI
    = not affected in share in impairment of GW

    - problem II

    - RE of subsidiary
    = NI - Dividends

    Alcera, Vincent Luigil C. | BSA 4-11


    22/02/2023-02/03/2023

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