Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Intercompany
Profit
Transactions
Plant Assets
6-2
1: TRANSFERS OF PLANT
ASSETS
6-3
6-4
6-5
2011 Calculations
Defer the unrealized gain, with full effect to Pak
Pak's Income from San
90%(70) 10 = $53
Noncontrolling interest share
10%(70) = $7
Elimination entry for 2009 Worksheet
Gain on sale of land (-Ga, -SE)
Land (-A)
10
10
6-6
90%(80) = $72
Noncontrolling interest share
10%(80) = $8
Elimination entry for Worksheets in 2012 to 2014
10
10
6-7
2015 Calculations
Recognize the previously deferred gain, with full effect
to Pak
Pak's Income from San
90%(90) + 10 = $91
Noncontrolling interest share
10%(90) = $9
Elimination entry for 2015 Worksheet
Investment in San (+A)
Gain on sale of land (Ga, +SE)
10
10
6-8
2: DEFERRING
UNREALIZED PROFITS
6-9
6-10
6-11
Downstream Example
Per owns 80% of Sop, acquired at cost equal
to fair value. On 1/1/2011, Per sells
machinery to Sop at a $30 profit. The
machinery has a remaining life of 5 years from
1/1/2011. Sop disposes of the machinery at
book value at the end of 5 years. Sop's
income is $70 in 2011, $80 per year for 2012
to 2014, and $90 in 2015.
6-12
2011 Calculations
Defer the unrealized gain and amortize it over 5 years
with full effect to Per
30 gain / 5 years = $6
Per's Income from Sop
80%(70) 30 + 6 = $32
Noncontrolling interest share
20%(70) = $14
Elimination entry for 2011 Worksheet
Gain on sale of machinery (-Ga, -SE)
30
Machinery (-A)
Accumulated depreciation (+A)
Depreciation expense (-E, +SE)
Copyright 2015 Pearson Education, Inc. All rights reserved.
30
6
6
6-13
3: RECOGNIZING
REALIZED, PREVIOUSLY
DEFERRED PROFITS
6-14
Upstream sales
Adjust investment in subsidiary account and
noncontrolling interest, proportionately
6-15
80%(80) + 6 = $70
Noncontrolling interest share
20%(80) = $16
Elimination entry for Worksheets in 2012
Investment in Sop (+A)
Accumulated depreciation (+A)
24
6
Machinery (-A)
Accumulated depreciation (+A)
Depreciation expense (-E, +SE)
Copyright 2015 Pearson Education, Inc. All rights reserved.
30
6
6
6-16
Entries (cont.)
Worksheet entries for 2013
Investment in Sop (+A)
18
12
Machinery (-A)
Accumulated depreciation (+A)
30
6
12
18
Machinery (-A)
Accumulated depreciation (+A)
Depreciation expense (-E, +SE)
Copyright 2015 Pearson Education, Inc. All rights reserved.
30
6
6
6-17
2015 Calculations
Recognize the remaining deferred gain, with full
effect to Per
Per's Income from Sop
80%(90) + 6 = $78
Noncontrolling interest share
20%(90) = $18
Elimination entries for 2015 Worksheet
Investment in Sop (+A)
Accumulated depreciation (+A)
6
24
Machinery (-A)
Accumulated depreciation (+A)
Depreciation expense (-E, +SE)
Copyright 2015 Pearson Education, Inc. All rights reserved.
30
6
6
6-18
4: IMPACT ON
NONCONTROLLING
INTEREST
6-19
6-20
Upstream Example
Pail owns 70% of Shovel, acquired at cost
equal to fair value. On 1/1/2011, Shovel sells
machinery to Pail at a $40 profit. The
machinery has a remaining life of 5 years from
1/1/2011. Pail uses the machinery for four
years, then sells it at a profit at the start of
2015. Shovel's income is $70 in 2011, $80 per
year for 2012 to 2014, and $90 in 2015.
6-21
2011 Calculations
Defer the unrealized gain and amortize it over 5 years
sharing the gain
40 gain / 5 years = $8
Pail's Income from Shovel
70%(70 40 + 8) = $26.6
Noncontrolling interest share
30%(70 40 + 8) = $11.4
Elimination entry for 2011 Worksheet
Gain on sale of machinery (-Ga, -SE)
40
Machinery (-A)
Accumulated depreciation (+A)
Depreciation expense (-E, +SE)
Copyright 2015 Pearson Education, Inc. All rights reserved.
40
8
8
6-22
70%(80 + 8) = $61.6
Noncontrolling interest share
30%(80 + 8) = $26.4
6-23
22.4
9.6
8.0
Machinery (-A)
Accumulated depreciation (+A)
Depreciation expense (-E, +SE)
40.0
8.0
8.0
6-24
16.8
7.2
16.0
Machinery (-A)
Accumulated depreciation (+A)
Depreciation expense (-E, +SE)
40
8.0
8.0
6-25
11.2
4.8
24.0
Machinery (-A)
Accumulated depreciation (+A)
Depreciation expense (-E, +SE)
40.0
8.0
8.0
6-26
2015 Calculations
Recognize the remaining deferred gain, sharing the impact with
controlling and noncontrolling interests
Unamortized gain = 1 year at $8
Pail's Income from Shovel
70%(90 + 8) = $68.6
Noncontrolling interest share
30%(90 + 8) = $29.4
Elimination entries for 2015 Worksheet
Investment in Shovel (+A)
5.6
2.4
32.0
Machinery (-A)
Accumulated depreciation (+A)
Gain on sale of machinery (Ga, +SE)
40.0
8.0
8.0
6-27
6-28
XXX
Machinery (-A)
Accumulated depreciation (+A)
Depreciation expense (-E, +SE)
XXX
X
X
6-29