Intercompany Debt Transfers Overview

Advanced financial accounting PowerPoint presentation. In this presentation we will give an overview of intercompany debt transfers. In other words within the concept of our consolidation process where we have parent subsidiary relationships we have intercompany debt debt going from one entity to the other, from parent to the subsidiary or subsidiary to the parent could be in the form of, of notes payable or in the form of bonds payable, get ready to account with advanced financial accounting. When we think of intercompany debt, we can break it out basically into two categories intercompany debt the debt from one to the other from parent to subsidiary or subsidiary to parent, two categories, one direct intercompany debt transfer and the other is the indirect intercompany debt transfer.

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Equity Method and Land Transfer

Advanced financial accounting PowerPoint presentation. In this presentation we’ll take a look at the equity method and land transfer get ready to account with advanced financial accounting, land transfer intercompany. Within the context of our consolidation, then we’re talking about situations where land is transferred from subsidiary to parent like a sale from subsidiary to parent or from parent to subsidiary. That resulting in basically an intercompany type of transaction we’re going to have to deal with with the consolidation process and possibly with the recording of the equity method by the parent as they reflect their investment in the subsidiary. We talked a little bit last time about the land transfer being similar to the inventory transfer because typically you’ll have like a gain that will be involved in it and your physical inventory that is changing hands. It does not have the added complexity as the property plant and equipment type of transfer. That would be depreciable assets with regards to accumulated appreciation and appreciation.

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Transfer of Long-Term Assets & Services Overview

Advanced financial accounting PowerPoint presentation. In this presentation we’re going to take a look at an overview of the transfer of long term assets and services. In other words transfers between related entities. If we’re thinking about a consolidation process then transfers that we will have to deal with with the consolidation process with consolidating or eliminating journal entries, you’re ready to account with advanced financial accounts. intercompany transactions need to be removed in the consolidation process.

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Inventory Transfers & Transfer Pricing

Advanced financial accounting. In this presentation we will discuss inventory transfers and transfer pricing. Our objective will be to get an idea of what inventory transfers are what will be the effect of inventory transfers and how to account for inventory transfers when considering a consolidation process, get ready to account with advanced financial accounting, inventory transfers and transfer pricing. So in essence, we’re talking about the inventory going from one organization to another, we can think about this in terms of parent subsidiary type of relationships.

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Parent Sale to Sub & Sub Resold

Advanced financial accounting. In this presentation we’re going to discuss an intercompany transaction where a parent makes a sale to a subsidiary and then the subsidiary resells it. In other words, we have this intercompany transaction, we want to think about how that is constructed. And then how we can do the reversing entry for it or a consolidation entry in the case of a consolidation of a parent and subsidiary in a consolidated financial statements, get ready to account with advanced financial accounting. So within a situation where we have a sale from P to s, and then S sells it to an outsider remember that as it goes to the outsider, that’s going to be the legitimate type of so that’s the arm’s length transaction, the sale from PETA is not so and therefore we kind of have to eliminate that. Now if it’s been sold to an outsider, then we have a situation where the inventory is still gone. There has been a sale being taken place. And so we so that’s good, but we still have to do the reversal of part of that intercompany transfer and it’s gonna boil down At the end of the day, basically debiting, the revenue account reversing revenue, and reversing the cost of goods sold. So this is the boiled down version. Now if you think about it, you might say what happy because if p sales to s, then you’re going to like debit cash credit, you know, you’re going to credit the sales, and then you debit cost of goods sold, and credit inventory and then asked is going to be recorded cash, and then they’re gonna be recording, then the other side go into inventory, and then right, there’s more, and then they made the sale to the outsider. So how do we boil this down? How does the intercompany boil down to just this right? We kind of kind of have an idea of that in our mind.

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Eliminating Intercompany Transactions

Advanced financial accounting. In this presentation we will discuss eliminating intercompany transactions, the objective will be to have an overview of the intercompany transactions, the types of intercompany transactions and the basic elimination entry for those intercompany transactions get ready to account with advanced financial accounting intercompany transactions, we’re going to start off by listing the intercompany transactions as we list them. Remember, our objective is in essence to remove the intercompany transactions.

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Intercompany Transactions

Advanced financial accounting. In this presentation we’re going to discuss intercompany transactions. So typically we have a situation where where we have a parent subsidiary relationship or thinking about a consolidation type of process within it. And then we have those intercompany transactions between the companies that need to be consolidated between parent and subsidiary, get ready to account with advanced financial accounting intercompany transactions, the intercompany transactions we’ll be focusing in on here and working some practice problems in on will include the intercompany receivables and payables need to be eliminated for consolidated financial statements.

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Consolidation & Income Taxes

Advanced financial accounting PowerPoint presentation. In this presentation we’ll talk about consolidation and income taxes get ready to account with advanced financial accounting. For a non taxable acquisition, the tax basis of assets acquired and liabilities assumed is not changed from the acquisition. In this case, then the carrying basis is the acquire ease basis, the acquiring company needs to identify all assets and liabilities acquired and their fair market value when the acquisition takes place, and then the deferred tax assets or liabilities that are from the difference between the fair market value and the tax basis when allocating the purchase price must be recorded by the acquiring company. So we have the tax expense allocation. When consolidated return is filed. What are we going to do with this tax expense allocation, the parent company and subsidiaries can file a consolidated income tax return or they can choose to file separate returns. So this is one of the things that we kind of have to consider here we’ve got a controlling interest that’s going to be involved. So we have two entities, one has a controlling interest and the other obviously parents subsidiary type of relationship question, then should we report just one tax return? Or should we have two tax returns, this is going to be a decision that needs to be made. But if we file one tax return, then at least 80% of its stock must be held by the parent company or another company included in the consolidation return for a subsidiary to be eligible to be included in a consolidated tax return.

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