Consolidation Journal Entries PDF

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Corporate Financial Reporting - Journal Entries...

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Consolidation*Journal*Entries*(Topic*5-7)* * Ø Transfer*of*inventory:*No*unrealised*profit* • Profits(realised(as(no(inventory(still(on(hand(but(adjust(Sales/COGS( • DR*Sales* * * 150* • ******CR*COGS* * * 150* * Ø Intragroup*receivables/payables* • DR*Intragroup*payable* 75* • *****CR*Intragroup*receivable* *75* ( Ø Transfer*of*inventory:*Unrealised*profit*in*ending*balance* • Profits(in(ending(inventory(–(inventory(still(on(hand( • Consolidation(journal(adjustment((1)( • DR*Sales*150( • ********CR*COGS*150( • DR*COGS*50( • *******CR*Inventory*50( • Consolidation(journal(adjustment((2)( • DR*DTA*($50*x*30%)* * 15* • ******CR*ITE* * * 15* ( Ø Profits*in*ending*inventory*–*transferred*inventory*partly*sold* • Consolidation(journal(adjustment((1)( o DR*Sales*150* o ******Cr*COGS*150* o DR*COGS*30*(40%*of*profit)* o ******CR*Inventory*30* • Consolidation(journal(adjustment((2):( o DR*DTA($30X*30%)*9* o ******CR*ITE*9* * Ø Transfer*of*inventory:*Unrealised*profit*in*opening*balance* • Recall(the(worksheet(entries(recorded(on(30(June(2016(were:( o DR(Sales( ( ( ( 150( o (((((CR(COGS( ( ( ( 100( o (((((CR(Inventory( ( ((( ((50( o DR(DTA( ( ( ((( ((15( o (((((CR(ITE( ( ( (( ((15( § Sales,*COGS,*ITE*adjustments*closed*to*R/E( o To(carry(forward(the(net(effect(of(last(year’s(consolidation(journals(the(following( entry(would(be(required(on(1(July(2016:( o DR*Retained*earnings* **35(after*tax*amount)* o DR* DTA* * * **15* o ******CR*Inventory* * * **50* (

o Once(the(inventory(is(sold(to(an(external(third(party(the(profit(is(realised( o The(consolidation(worksheet(entry(must(be(amended(to(reflect(the(following(for( the(remainder(of(the(2016/17(financial(year:( o DR*Retained*earnings* 35* o DR*ITE* * * 15* o *****CR*COGS* * * 50* * Ø Topic*2*-*Intragroup*transfers*of*property,*plant*and*equipment** Ø Transfers*of*property,*plant*&*equipment* • Sale*of*property,*plant*and*equipment* • Eliminate(unrealized(profit(and(reduce(asset(to(group(Written(Down(Value( o DR**Gain*on*sale*** * 60* o ****CR*Accum*Dep’n* * * 10* o * CR*Machine* * * 50* • Recognize(tax(effect(of(profit(elimination( o DR**DTA* (.3*x*60)* * * 18* o * CR*ITE* * * * 18* * Ø Depreciable*asset*transfers*–*depreciation** • The(parent((being(the(purchaser)(will(depreciate(the(asset(but(at(different(value( than(the(subsidiary(would(have(depreciated( • In(subsequent(years(the(following(entry(worksheet(entry(is(recorded:( o DR**Retained*earnings*** 42* o DR**DTA************************ 18* o ******CR**Machine***************** 50* o ******CR**Accum*Dep’n* * 10* • In(addition(to(the(above,*one(year(after(transfer((30(June(2017)(an(entry(to(adjust( depreciation(is(required(as(follows:* o DR*****Accum*Dep’n* 6.67* o *******CR******Dep’n*Expense* 6.67* o DR******ITE*($18*x*1/9)* *2* o *******CR*******DTA* * *2** • In*the*year*ended*30*June*2018*(the*second*year*after*the*sale)*the*entries*would* be*as*follows:* o DR**Retained*earnings*** * 42* o DR**DTA************************ * 18* o *****CR**Machine****************** 50* o *****CR*Accum*Dep’n* * 10* * o DR*******Accum*Dep’n* * 13.34* o *****CR*******Depreciation*Expense*6.67* o * CR*******Retained*Earnings* * 6.67* * o DR********ITE* * **2* o DR********Retained*Earnings* **2* o ********CR*******DTA* * **4** *

Ø Topic*4*-*Intragroup*services* • DR** Services*revenue* 100* • ****CR*Services*expense* * 100* * ( Ø Topic*5*–*Intragroup*Dividends* • Assume(B((100%(owned(subsidiary)(declared(and(paid(a(dividend(of($100(to(A((the( parent(entity)(during(the(current(period( o Dr*Dividend*Revenue*100* o ****Cr*Dividend*Paid*100* ( • Where(dividends(are(declared((but(not(yet(paid)(the(treatment(is(as(follows:( o Dr*Dividends*Payable*100( o *****Cr*Dividends*Declared*100( o Dr*Dividend*Revenue*100( o *****Cr*Dividend*Receivable*100( ( • What(if(A(only(owned(60%(of(B?(((Covered(next(week(also)Assume(B(paid(a(dividend( of($100( o Dr*Dividend*Revenue*60* o ****Cr*Dividend*Paid*600* * Ø Topic*6*-*Intragroup*borrowings* • The(consolidation(journal(entry(to(eliminate(intragroup(borrowings(of($100(in( payable(and(receivable(accounts(is:( o DR**Payable*(loan)** * **100* o *******CR**Receivable**(loan)*** 100* • To(eliminate(interest(revenue(and(expense(recorded(during(the(year(by(each(entity( at(10%(per(annum:( o DR**Interest*revenue* * 10* o ******CR**Interest*expense* * 10* ( ( * * ( * ( * ( * (...