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Intercompany Transactions Scenarios

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5 views19 pages

Intercompany Transactions Scenarios

notes

Uploaded by

amojeda
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd

Scenario 1 - Whole, Downstream

2020
J/E
Paramore Snow
Dr. Cash 1,300,000.00 Dr. Land
Cr. Land 800,000.00
Gain on Sale 500,000.00

WPEEs

WPEE 6.1
Dr. Gain on Sale 500,000.00
Cr. Land 500,000.00

2021
WPEE 6.1
Dr. R/E, beg 500,000.00
Cr. Land 500,000.00

2022
J/E Cash

Sub
SP 1,500,000.00
CV 1,300,000.00
Gain 200,000.00

WPEE 6.1
Dr. R/E, beg 500,000.00
Cr. Land 500,000.00
WPEE 6.2
Dr. Land 500,000.00
Cr. Gain on Sale 500,000.00

Scenario 2 - whole, upstream


2020
Paramore Snow Patrol
Dr. Land 1,300,000.00 Dr. Cash
Cr. Cash 1,300,000.00
WPEE 6.1
Dr. Gain on Sale 500,000.00
Cr. Land 500,000.00

2021
WPEE 6.1
Dr. R/E, beg 500,000.00
Cr. Land 500,000.00

2022
Cash 1,500,000.00
Land 1,300,000.00
Gain on Sale 200,000.00
Parent FS Conso
SP 1,500,000.00 1,500,000.00
CV 1,300,000.00 800,000.00
Gain 200,000.00 700,000.00

WPEE 6.1
Dr. R/E, beg 500,000.00
Cr. Land 500,000.00
WPEE 6.2
Dr. Land 500,000.00
Cr. Gain on Sale 500,000.00

Scenario 3 - Partially owned, downstream


J/E
2020
Dr. Land 1,300,000.00 Dr. Land
Cr. Cash 800,000.00
Gain on Sale 500,000.00

2021

2022
Cash

Scenario 4 - partially owned, upstream


J/E
2020
Dr. Cash 1,300,000.00 Dr. Land
Cr. Land 1,300,000.00

2021

2022
Cash 1,500,000.00
Land 1,300,000.00
Gain on Sale 200,000.00

2023

Scenario 5 - Lateral
WPEEs
2020
Gain on Sale 500,000.00
Land 500,000.00
on Allocation, check who sold the Land
See 2 sold the land, so use 80% when allocation the Gain on Sale

2021
R/E, beg 400,000.00
NCI, beg 100,000.00
Land 500,000.00

2022
R/E, beg 400,000.00
NCI, beg 100,000.00
Land 500,000.00

Land 500,000.00
Gain on Sale 500,000.00
1,300,000.00
Cr. Cash 1,300,000.00

1,500,000.00
Land 1,300,000.00
Gain on Sale 200,000.00

Conso
1,500,000.00
800,000.00
700,000.00

Snow Patrol
1,300,000.00
Cr. Land 800,000.00
Gain on Sale 500,000.00
WPEEs

1,300,000.00 WPEE 6.1


Cr. Cash 1,300,000.00 Dr. Gain on Sale 500,000.00
Cr. Land 500,000.00

WPEE 6.1
Dr. R/E, beg 500,000.00
Cr. Land 500,000.00

1,500,000.00 WPEE 6.1


Land 1,300,000.00 Dr. R/E, beg 500,000.00
Gain on Sale 200,000.00 Cr. Land 500,000.00
WPEE 6.2
Dr. Land 500,000.00
Cr. Gain on Sa 500,000.00

WPEEs
1,300,000.00 WPEE 6.1
Cr. Cash 800,000.00 Dr. Gain on Sale 500,000.00
Gain on Sale 500,000.00 Cr. Land 500,000.00

WPEE 6.1
Dr. R/E, beg 400,000.00
Dr. NCI, beg 100,000.00
Cr. Land 500,000.00

WPEE 6.1
Dr. R/E, beg 400,000.00
Dr. NCI, beg 100,000.00
Cr. Land 500,000.00

WPEE 6.2
Dr. Land 500,000.00
Cr. Gain on Sa 500,000.00

Technically no WPEEs kasi WPEE 6.1 and 6.2 will cancel ou


and 6.2 will cancel out each other
Scenario 1 - wholly, downstream
2020
J/Es
PL SC
Cash 1,300,000.00 Equipment 1,300,000.00
Acc Dep 320,000.00 Cash
Equipment 1,120,000.00
Gain on Sale 500,000.00 Dep Exp 260,000.00
Acc Dep

2021

Dep Exp 260,000.00


Acc Dep

If Equipment was sold for 1,000,000


2022
PL SC
Cash 1,000,000.00
A/D 520,000.00
Equipment
Gain
Scenario 4 - Partially Owned, Upstreamed

WPEEs
2020
7.1 Gain on Sale 500,000.00
Equipment, net 500,000.00

7.2 Acc Dep 100,000.00


Dep Exp 100,000.00

The P/L accounts are allocated based on ownership Structure

2021
7.1 R/E, beg 400,000.00
NCI, beg 100,000.00
Equipment, net 500,000.00

7.2 Acc Dep 200,000.00


Dep Exp 100,000.00
R/E, beg 80,000.00
NCI, beg 20,000.00

Scenario 5
7.1 Gain on Sale 500,000.00
Equipment, net 500,000.00

7.2 Acc Dep 100,000.00


Dep Exp 100,000.00
Allocate it based on who is the seller. In this case, it is Suu 2, thus 85% allocati

2021
7.1 R/E, beg 425,000.00
NCI, beg 75,000.00
Equipment, net 500,000.00

7.2 Acc Dep 200,000.00


Dep Exp 100,000.00
R/E, beg 85,000.00
NCI, beg 15,000.00
WPEEs

WPEE 7.1
1,300,000.00 Gain on Sale 500,000.00
Equipment 180,000.00
Acc Dep 320,000.00
260,000.00
WPEE 7.2
Sub
1,300,000.00 800,000.00
5.00 5.00
260,000.00 160,000.00

Acc Dep 100,000.00


Dep Exp 100,000.00

WPEE 7.1
R/E, beg 500,000.00
260,000.00 Equipment, Net 500,000.00

Acc Dep 200,000.00


R/E, beg 100,000.00
Dep Exp 100,000.00

WPEE 7.1
R/E, beg 500,000.00
1,300,000.00 Equipment, Net 500,000.00
220,000.00
WPEE 7.2
Acc Dep 200,000.00
R/E, beg 200,000.00

WPEE 7.3
Sub Conso
1,000,000.00 1,000,000.00 320,000.00
780,000.00 480,000.00
220,000.00 520,000.00 300,000.00

Dr. Equipment, 500,000.00


Cr. Gain on Sale 300,000.00
Cr. Acc Dep 200,000.00
Structure

is Suu 2, thus 85% allocation 2 ways to recognize the G/L


1. Usage
2. Sell
Scenario 1 - Upstream, wholly
J/Es
2020
Parent Subsidiary
Inventory 300.00 Cash 300.00
Cash 300.00 Sales
COGS 225.00
Inventory

AR 320.00
Sales 320.00
COGS 200.00
Inventory 200.00

2021
AR 160.00
Sales 160.00
COGS 100.00
Inventory 100.00

Scenario 2 - downstream, wholly


2020
Parent- Seller Subsidiary - Buyer
A/R 300,000.00 Inventory 300,000.00
Sales 300,000.00 A/P
COGS 210,000.00
Inventory 210,000.00 A/R 325,000.00
Sales
COGS 250,000.00
Inventory

2021
Cash 300,000.00 AP 300,000.00
AR 300,000.00 Cash

A/R 65,000.00
Sales
COGS 50,000.00
Inventory

Scenario 3 - Downstream, partially


Parent-Seller Subsidiary - Buyer
Cash 300.00 Inventory 300.00
Sales 300.00 Cash
COGS 225.00
Inventory 225.00 AR 320.00
Sales
COGS 200.00
Inventory

Scenario 4 - Upstream, partially


2020
Parent- Buyer Subsidiary - Seller
Inventory 300,000.00 A/R 300,000.00
A/P 300,000.00 Sales
COGS 210,000.00
A/R 325,000.00 Inventory
Sales 325,000.00
COGS 250,000.00
Inventory 250,000.00

2021
AP 300,000.00 Cash 300,000.00
Cash 300,000.00 AR

A/R 65,000.00
Sales 65,000.00
COGS 50,000.00
Inventory 50,000.00

Parent
NI - Parent 100,000.00
NI - Sub 40,000.00
WPEE 8.1 - 12,000.00
Div Inc - 8,000.00
Acquisition- 10,000.00
110,000.00
Scenario 5 - Lateral
2020
Soo 1 Soo 2
Inventory 300,000.00 A/R 300,000.00
A/P 300,000.00 Sales
COGS 210,000.00
A/R 325,000.00 Inventory
Sales 325,000.00
COGS 250,000.00
Inventory 250,000.00

2021
AP 300,000.00 Cash 300,000.00
Cash 300,000.00 AR

A/R 65,000.00
Sales 65,000.00
COGS 50,000.00
Inventory 50,000.00
WPEEs

8.1 Remove the intercompany sale, and adjust the COGS/Inventory to reflect o
Sales 300.00
300.00 Inventory 25.00 <--------- Unrealized intercompany Gross Profi
COGS 225.00 <---------- From intercompany sale
225.00 Cogs 50.00 <------------ the selling price of 100 refers to in
or
Sales 300.00
Inventory 25.00
COGS 275.00

8.2 Remove the Payable of the buyer and the Receivable of the Seller
A/P xxx
A/R xxx

8.1
R/E, beg 25.00
Inventory 25.00
Record the Prior year WPEE

8.3 Inventory 25.00


COGS 25.00

The intercompany gain was realized due to lower COGS

WPEEs
8.1 Sales 300,000.00
COGS (seller) 210,000.00
300,000.00 COGS (buyer) 75,000.00
Inventory 15,000.00

325,000.00 90,000.00 Total Unrealized GP


15,000.00
250,000.00 90000*50k/300k

8.2 A/P 300,000.00


A/R 300,000.00

8.1 R/E, beg 15,000.00


300,000.00 Inventory 15,000.00

8.3 Inventory 15,000.00


65,000.00 COGS 15,000.00

50,000.00

8.1
Sales 300.00
300.00 Inventory 25.00
COGS 225.00
Cogs 50.00
320.00 or
Sales 300.00
200.00 Inventory 25.00
COGS 275.00

WPEEs
8.1 Sales 300,000.00
COGS (seller) 210,000.00
300,000.00 COGS (buyer) 75,000.00
Inventory 15,000.00
210,000.00 8.2 A/P 300,000.00
A/R 300,000.00

8.1 R/E, beg 12,000.00


NCI, beg 3,000.00
300,000.00 Inventory 15,000.00

8.3 Inventory 15,000.00


COGS 15,000.00

Subsidiary

10,000.00
- 3,000.00

7,000.00
WPEEs
8.1 Sales 300,000.00
300,000.00 COGS (seller) 210,000.00
COGS (buyer) 75,000.00
210,000.00 Inventory 15,000.00
8.2 A/P 300,000.00
A/R 300,000.00

8.1 R/E, beg 11,250.00


300,000.00 NCI, beg 3,750.00
Inventory 15,000.00

8.3 Inventory 15,000.00


COGS 15,000.00
Inventory
- for the parent, he has 1 remaining unit left
e COGS/Inventory to reflect orig cost - thus, the value in the conso shoud be 75, but parent re

ed intercompany Gross Profit


tercompany sale
ling price of 100 refers to intercompany cost, so adjust it

eivable of the Seller

Inventory
in Parent - 25.00 from WPEE 8.1

WPEE 8.3 25.00

wer COGS
ng unit left
ud be 75, but parent recorded as 100 (300-200)

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