Advanced Accounting Ch.6【华月公子吧】

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Advanced Accounting Ch.6

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SUMMARY
To ensure that consolidated financial statements reflect only transactions between the single entity and those outside the entity, all intercompany transactions are eliminated. The elimination of intercompany revenues and expenses does not affect the net income of this entity; therefore, it cannot affect the amounts allocated to the two equities in the balance sheet.
Intercompany profits in assets are not recognized in the consolidated financial statements until the assets have been sold outside the group or consumed. (The concept of realization as a result of consumption is discussed in the next chapter.)
The elimination of unrealized intercompany profits in assets reduces the net income of the consolidated entity. Also, it will affect the amount allocated to non-controlling interest only if the subsidiary was the selling company. The income tax recorded on the unrealized profit is also removed from the consolidated income statement and is shown as deferred income taxes until a sale to outsiders takes place.
Page 273
When the assets that contain the intercompany profit are sold outside (or consumed), the profit is considered realized and is reflected in the consolidated income statement. The appropriate income tax is removed from the consolidated balance sheet and reflected as an expense in the income statement. The adjustments for income tax ensure that income tax expense is properly matched to income recognized on the consolidated income statement.

送TA礼物

1楼2012-02-22 05:52回复

Significant Changes in the Last Two Years
1. For publicly accountable enterprises, IFRSs have replaced the former sections of the CICA Handbook. The following table shows the IFRSs covered in this chapter along with their counterparts from the former sections of the CICA Handbook:
IFRSs
CICA Handbook Counterparts
IAS 27: Consolidated and Separate Financial Statements
Section 1601: Consolidated Financial
Statements
Section 1602: Non-controlling Interests
2. The bottom portion of the consolidated income statement segregates consolidated profit into two components: attributable to shareholders of parent company and attributable to non-controlling interest.
3. When the income statement classifies expenses by their nature, the elimination of intercompany sales, purchases, and unrealized profit in inventory could affect many different accounts including raw materials consumed, labour costs, depreciation of factory equipment, other conversion costs, and changes in inventories of work in progress and finished goods.
4. When losses are recognized on intercompany transactions, the intercompany transactions should be eliminated on consolidation. Then, the assets involved in the intercompany transaction should be checked for impairment.
5. The consolidation adjustments to eliminate intercompany transactions and unrealized profits will differ depending on whether the reporting entity uses the cost model or the revaluation model for accounting for their property, plant, and equipment. The consolidated statements should present the property, plant, and equipment at the values that would have been reported on the selling company's statements had the intercompany transaction not taken place.

2楼2012-02-22 05:52

Changes Expected in the Next Three Years
No major changes are expected in the next three years for the topics presented in this chapter.
Page 274
SELF-STUDY PROBLEM
The following are the Year 5 financial statements of Peter Corporation and its subsidiary, Salt Company:
Peter
Salt
Year 5 income statements
Sales
$900,000
$250,000
Management fees
25,000
—
Interest
—
3,600
Gain on land sale
—
20,000
Dividends
12,000
—
937,000
273,600
Cost of sales
540,000
162,000
Interest expense
3,600
—
Other expenses
196,400
71,600
Income tax expense
80,000
16,000
820,000
249,600
Profit
$117,000
$24,000
Year 5 retained earnings statements
Balance, January 1
$153,000
$72,000
Profit
117,000
24,000
270,000
96,000
Dividends
50,000
15,000
Balance, December 31
$220,000
$81,000

3楼2012-02-22 05:53

Additional Information
On January 1, Year 3, Peter purchased 80 percent of the common shares of Salt for $65,000. On that date, Salt had retained earnings of $10,000, and the book values of its identifiable net assets were equal to fair values.
The companies sell merchandise to each other. Peter sells to Salt at a gross profit rate of 35 percent; Salt earns a gross profit of 40 percent from its sales to Peter.
The December 31, Year 4, inventory of Peter contained purchases made from Salt amounting to $7,000. There were no intercompany purchases in the inventory of Salt on this date.
Page 275
During Year 5 the following intercompany transactions took place:
a. Salt made a $25,000 payment to Peter for management fees, which was recorded as “other expense.”
b. Salt made sales of $75,000 to Peter. The December 31, Year 5, inventory of Peter contained merchandise purchased from Salt amounting to $16,500.
c. Peter made sales of $100,000 to Salt. The December 31, Year 5, inventory of Salt contained merchandise purchased from Peter amounting to $15,000.
d. On July 1, Year 5, Peter borrowed $60,000 from Salt and signed a note bearing interest at 12 percent per annum. Interest on this note was paid on December 31, Year 5.
e. In Year 5, Salt sold land to Peter, recording a gain of $20,000. This land is being held by Peter on December 31, Year 5.
Goodwill impairment tests have been conducted yearly since the date of acquisition. Losses due to impairment were as follows: Year 3, $2,600; Year 4, $800; Year 5, $1,700.
Peter accounts for its investment using the cost method.
Both companies pay income tax at a rate of 40 percent.

4楼2012-02-22 05:54

Required:
a. Prepare the Year 5 consolidated financial statements.
b. Prepare the following:
i. A calculation of consolidated retained earnings as at December 31, Year 5.
ii. A statement of changes in non-controlling interest for Year 5.
iii. A statement of changes in deferred income taxes for Year 5.
c. Assume that Peter uses the equity method for its internal records.
i. Calculate the balance in the investment account as at December 31, Year 4.
ii. Prepare Peter's equity method journal entries for Year 5.

5楼2012-02-22 05:54

肯定是我打开方式不对- -

IP属地:浙江

7楼2012-05-06 09:12

……我本想读读看，后来发现自己自不量力了= =

来自掌上百度8楼2012-05-12 00:48

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Advanced Accounting Ch.6

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