Consolidation entries PDF

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S - Entry Debit - Retained Earnings (name) Debit - Common Stock Debit - Additional Paid in Capital _Credit - Investment in Subsidiary (name) _Credit - Non-controlling interest in subsidiary (name) Remove Subsidiary's common stock. Remove Subsidiary's retained earnings. Remove Subsidiary's additional paid in capital. Reduce investment in subsidiary. Reduce non-controlling interest in subsidiary. A - Entry Debit - Trademarks Debit - Patents Debit - Goodwill _Credit - Equipment _Credit - Investment in Subsidiary (name) _Credit - Non-controlling interest Allocate the un-amortized tangible & intangible assets as of the beginning of the period with adjustments made to fair value. Increase trademarks. Increase patents. Increase goodwill. Reduce equipment Reduce investment in Subsidiary. Credit non-controlling interest in Subsidiary, will have (credit) balance. I - Entry Debit - Parents (name) equity income received from Subsidiary (name) _Credit - Investment in Subsidiary (name) Remove Subsidiary's income that was acquired by Parent along with excess amortization. D - Entry Debit - Investment in Subsidiary (name) _Credit - Dividends Remove Dividends issued by Subsidiary. E - Entry Debit - Amortization Expense Debit - Equipment (net) _Credit - Depreciation expense _Credit - Patents, franchise, trademarks _Credit - Customer Relationships

Reduce depreciation exp. Increase amortization exp. Reduce customer relationships. Increase equipment. Reduce patents. TI - Entry (transferred inventory) Debit - Sales/Revenue _Credit - Cost of good sold Removes intra-entity sales/inventory transfers by removing sales/revenue and removing COGS. G - Entry ( inventory at end of year 1) Debit - Cost of Goods Sold (unrealized gross profit) _Credit - Inventory (unsold) Removes the unrealized gross profit from ending inventory. *G - Entry (downstream sales) *G is performed before any adjusted entries. Debit - Investment in Subsidiary (name) _Credit - Cost of Goods Sold (parents) Parent sells inventory to subsidiary where there is a balance of unsold inventory at end of year. *G - Entry (upstream sales) *G is performed before any adjusted entries. Debit - Retained earnings - beg balance of Subsidiary (name) _Credit - Cost of Goods Sold (unrealized gross profit) Subsidiary sells inventory to Parent. There is a balance of unsold inventory at end of year. *G - Reduces COGS (unrealized gross profit) at beginning of next period. Reduces retained earnings at beginning of next period. Consolidated Entries should be done in this order: (*G), (S),(A),(I),(D),(E),(P),(TI),(G) TL - Entry (Transfer Land) Debit - Gain on sale of land _Credit - Land When land is transferred gains are not realized. Therefore, remove gains by crediting land and debiting gain on sale of land. This must be done every fiscal period. *GL - Entry (downstream sales) Debit - Investment in Subsidiary (name) _Credit - Land How to remove unrealized gains from downstream land sales. Must be done every year.

*GL - Entry (upstream sales) Debit - Retained Earnings - seller's beginning balance _Credit - Land How to remove unrealized gains from upstream land sales. Must be done every year. *GL - Entry (sold to 3rd party) Debit - Retained earnings - seller's beginning balance _Credit - Gain on sale of Land When land is sold to a 3rd party gains must be realized in current period on consolidated financial statements. Only upstream land transfers that are later sold to a 3rd party are recognized by subsidiary and N.C.I. TA - Entry (transfer asset) Debit - Gain on sale of Equipment (seller's name) Debit - Equipment _Credit - Accumulated Depreciation Unrealized gain must be removed and asset/equipment restated to original cost in year of transfer. Accumulated Depreciation - Gain = Equipment/Asset adjustment ED - Entry (excess depreciation) Debit - Accumulated Depreciation _Credit - Depreciation Expense Buyers depreciation is based on inflated transfer price. Excess depreciation expense must be removed in the year of transfer. *TA - Entry (transfer asset after 1st year ) Debit - Retained earnings 1/1/xx (seller's name) Debit - Equipment _Credit - Accumulated Depreciation Debit - Accumulated Depreciation _Credit - Depreciation Expense Every year these figures need to be adjusted during consolidation. Over the life of the asset the unrealized gain is closed to retain earnings and needs to be reduced to zero. *TA - Entry (downstream transfer asset after 1st year) Debit - Investment in Subsidiary (name) Debit - Equipment _Credit - Accumulated Depreciation Investment in subsidiary adjustment for downstream asset transfers. No change for ED consolidation part of this. Compute Upstream Net Income in the year of Sale: (Subsidiaries Net Income - Excess Amortization -Unrealized Gains + Excess Depreciation)*P % =

Compute Upstream Net Income in subsequent years: (Subsidiaries Net Income - Excess Amortization + Excess Depreciation)*P % = Same computation as initial year except we do not subtract unrealized gains. Compute Downstream Net Income in the year of Sale: (Subsidiaries Net Income - Excess Amortization)*P % - Unrealized Gain + Excess Depreciation = Compute Downstream Net income in subsequent years: (Subsidiaries Net Income - Excess Amortization)*P % + Excess Depreciation = Same computation as initial year except we do not subtract unrealized gains. Compute N.C.I.'s share of Subsidiaries Income for Downstream sales: (Subsidiaries Net Income - Excess Amortization)*N.C.I. % = Compute Upstream N.C.I.'s share of Subsidiaries Income in the year of sale: (Subsidiaries Net Income - Excess Amortization - Unrealized Gain + Excess Depreciation)*N.C.I. % = Compute Upstream N.C.I.'s share of Subsidiaries Income in the subsequent years: (Subsidiaries Net Income - Excess Amortization + Excess Depreciation)*N.C.I. % = Same computation as initial year except we do not subtract unrealized gains. Compute Consolidated Sales: P's COGS + Sub's Sales - Intra-entity transfer price = Compute Consolidated COGS: P's COGS + Sub's COGS - Intra-entity transfer price + unrealized gross profit in ending inventory - unrealized gross profit in beginning inventory = How to compute Equity Income for Downstream Sales: (Sub's Net Income - Excess Amortization)*P % - Unrealized Gross Profit in ending inventory + Unrealized Gross Profit in beginning inventory = How to compute Equity Income for Upstream Sales: (Sub's Net Income - Excess Amortization - Unrealized Gross Profit in ending inventory + Unrealized Gross Profit in beginning inventory)*P % = Compute N.C.I. share of Sub's Income for Downstream sales: (Sub's Net Income - Excess Amortization)*N.C.I. % = Compute N.C.I. share of Sub's Income for Upstream sales: (Sub's Net Income - Excess Amortization - Unrealized Gross Profit in ending inventory + Unrealized Gross Profit in beginning inventory)*N.C.I. % =...