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    Week 7 - Intercompany Sales of Inventory

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    Theodore Sebastian
    Intercompany sales of inventory occur between a parent company and its subsidiaries. There are two types: downstream sales from parent to subsidiaries, and upstream sales from subsidiaries to parent. Upstream sales recognize non-controlling interest (NCI) since they generate unrealized profit/loss, with the parent recognizing only its percentage of acquisition and NCI recognizing the rest. Downstream sales do not recognize NCI as the parent absorbs all unrealized profit/loss. Elimination entries are made to remove the intercompany transactions and unrealized profit in ending inventory from consolidated financial statements. Realized profit is recognized proportionately to controlling interest and NCI.

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    Week 7 - Intercompany Sales of Inventory

    Uploaded by

    Theodore Sebastian
    23 views2 pages
    Intercompany sales of inventory occur between a parent company and its subsidiaries. There are two types: downstream sales from parent to subsidiaries, and upstream sales from subsidiaries to parent. Upstream sales recognize non-controlling interest (NCI) since they generate unrealized profit/loss, with the parent recognizing only its percentage of acquisition and NCI recognizing the rest. Downstream sales do not recognize NCI as the parent absorbs all unrealized profit/loss. Elimination entries are made to remove the intercompany transactions and unrealized profit in ending inventory from consolidated financial statements. Realized profit is recognized proportionately to controlling interest and NCI.

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    Week 7 _ Intercompany Sales of Inventory

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    Intercompany sales of inventory occur between a parent company and its subsidiaries. There are two types: downstream sales from parent to subsidiaries, and upstream sales from subsidiaries to parent. Upstream sales recognize non-controlling interest (NCI) since they generate unrealized profit/loss, with the parent recognizing only its percentage of acquisition and NCI recognizing the rest. Downstream sales do not recognize NCI as the parent absorbs all unrealized profit/loss. Elimination entries are made to remove the intercompany transactions and unrealized profit in ending inventory from consolidated financial statements. Realized profit is recognized proportionately to controlling interest and NCI.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    23 views2 pages

    Week 7 - Intercompany Sales of Inventory

    Uploaded by

    Theodore Sebastian
    Intercompany sales of inventory occur between a parent company and its subsidiaries. There are two types: downstream sales from parent to subsidiaries, and upstream sales from subsidiaries to parent. Upstream sales recognize non-controlling interest (NCI) since they generate unrealized profit/loss, with the parent recognizing only its percentage of acquisition and NCI recognizing the rest. Downstream sales do not recognize NCI as the parent absorbs all unrealized profit/loss. Elimination entries are made to remove the intercompany transactions and unrealized profit in ending inventory from consolidated financial statements. Realized profit is recognized proportionately to controlling interest and NCI.

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    © All Rights Reserved
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    of 2

    Intercompany Sales of Inventory

    Merupakan transaksi penjualan/pembelian inventory antara perusahaan induk dan perusahaan


    anak

    Downstream Upstream
    Parent

    Subs. 1 Subs. 2
    Horizontal

    Notes :
    1. Downstream : penjualan dari Induk ke anak. Tidak memunculkan akun NCI karena
    seluruh laba/rugi yang belum terealisasi (unrealized gain/loss) ditanggung parent.
    2. Upstream : penjualan dari anak ke induk. Memunculkan akun NCI karena penjualan
    memunculkan laba/rugi yang belum teralisasi. Yang ditanggung parent hanya
    sebagian (sebesar % akusisi) saja. Sedangkan sisanya ditanggung NCI (pihak luar)
    Profit (loss) on Intercompany Sales of Inventory
    1. Realized : Inventory sudah dijual ke pihak ketiga, laba/rugi sudah bisa
    diakui/direalisasi
    2. Unrealized : Inventory belum dijual ke pihak ketiga, laba/rugi belum bisa
    diakui/direalisasi
    Jurnal Eliminasi Upstream Sales
    Transaksi Cost Method Equity Method
    Eliminasi Dr. Sales Dr. Sales
    intercompany sales Cr. Purchases Cr. Purchases
    Eliminasi Dr. Ending Inventory (I/S) Dr. Ending Inventory (I/S)
    intercompany Cr. Inventory (B/S) Cr. Inventory (B/S)
    profit in ending
    inventory
    Mengakui Dr. Beginning RE-P Dr. Investment in S
    intercompany Dr. NCI Dr. NCI
    profit yang telah Cr. Beginning Inventory Cr. Beginning Inventory
    direalisasi

    Jurnal Eliminasi Downstream Sales


    Transaksi Cost Method Equity Method
    Eliminasi Dr. Sales Dr. Sales
    intercompany sales Cr. Purchases Cr. Purchases
    Eliminasi Dr. Ending Inventory (I/S) Dr. Ending Inventory (I/S)
    intercompany Cr. Inventory (B/S) Cr. Inventory (B/S)
    profit in ending
    inventory
    Mengakui Dr. Beginning RE-P Dr. Investment in S
    intercompany Cr. Beginning Inventory Cr. Beginning Inventory
    profit yang telah
    direalisasi

    Consolidated Income
    a. Subsidiary
    Net Income = XXXXXX
    +/+ Realized Profit = XXXXXX
    -/- Unrealized Profit = (XXXXX)
    Adjusted Income = XXXXXX
    To NCI (%NCI) = XXXXX
    To CI (% Akuisisi) = XXXXX

    b. Parent
    Net Income = XXXXX
    +/- Income From Subs = XXXXX
    +/+ Realized Profit = XXXXX
    -/- Unrealized Profit = (XXXX)
    -/- Dividend Income = (XXXX)
    Ci in Consolidated Income = XXXXX
    NCI in Consolidated Income = XXXXX
    Consolidated Income = XXXXX

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