INTERCOMPANY PROFIT Accounting for Upstream

and Dowstream Sales in

TRANSACTIONS - INVENTORY Parent-Subsidiary
Relationship
 INTERCOMPANY TRANSACTIONS - INVENTORY
Single Accounting Entity
Separate Legal Entities

Parent
Company P Corp.

Transaksi Hulu Transaksi Hilir

(Dowstream Sales) (Upstream Sales)

Subsidiary
Company
S Corp. (80%)
 INTERCOMPANY TRANSACTIONS - INVENTORY
Single Accounting Entity
Separate Legal Entities
A/R $120
Harga Pokok $100 Sales $120
P Corp. Harga Jual $120 COG $100
Inventory $100

Transaksi Hulu
(Dowstream Sales)

S Corp. (80%) Inventory $120

A/P $120
 INTERCOMPANY TRANSACTIONS - INVENTORY
Single Accounting Entity
Separate Legal Entities
Dari perspektif laporan keuangan
konsolidasi, selama inventory belum
P Corp. dijual oleh S akan terdapat
unrealized profit sebesar $20
Sales $120 ($120-$100), di mana:
Transaksi Hulu 1. Sales pada P overstated sebesar
(Dowstream Sales) $20 (unrealized profit) → Net
Inventory $120 income of P overstated $20
2. Inventory (akhir tahun) pada S
S Corp. (80%) overstated sebesar $20
(unrealized profit)
INTERCOMPANY TRANSACTIONS - INVENTORY
Single Accounting Entity
Separate Legal Entities

Inventory $250
P Corp. A/P $250

Transaksi Hilir
(Upstream Sales)
A/R $250
Sales $250
Harga Pokok $200
S Corp. (80%) COG $200
Harga Jual $250 Inventory $200
 INTERCOMPANY TRANSACTIONS - INVENTORY
Single Accounting Entity
Separate Legal Entities
Dari perspektif laporan keuangan
konsolidasi, selama inventory belum
dijual oleh P akan terdapat
P Corp. unrealized profit sebesar $50
($250-$200), di mana:
Inventory $250 1. Sales pada S overstated sebesar
Transaksi Hilir $50 (unrealized profit) → Net
(Upstream Sales) Income of S overstated $50
Sales $250
2. Inventory (akhir tahun) pada P
overstated sebesar $50
S Corp. (80%) (unrealized profit)
INTERCOMPANY TRANSACTION - INVENTORY
Intercompany Profit
Transactions - Inventory

Implementation of Preparation of
Equity Method Consolidated FS
THE IMPLEMENTATION OF
EQUITY METHOD
 INTERCOMPANY TRANSACTIONS - INVENTORY
Single Accounting Entity P tidak boleh mengakui
Separate Legal Entities unrealized profit yang ada
Net Income of P overstated sebesar PERSENTASI
sebesar UNREALIZED KEPENTINGAN yang
P Corp. dimilki
PROFIT pada inventory
akhir tahun
Transaksi Hulu Transaksi Hilir
(Dowstream Sales) (Upstream Sales)

Net Income of S overstated

sebesar UNREALIZED
P tidak boleh mengakui S Corp. (80%) PROFIT pada inventory
SELURUH unrealized profit
yang ada akhir tahun
DOWNSTREAM SALES - INVENTORY
Tahun 2011
1. 2011 P menjual inventory ke S Dividend
seharga $120 (harga pokok $100) DR/Cash $xxx
Investment in S $xxx
2. Sampai akhir 2011 inventory itu Pengakuan Net Income
belum dijual lagi oleh S Investment in S $xxx
Income from S $xxx
Amortisasi Excess (jika ada)
Investment in S $xxx
Income from S $xxx
Income from S $xxx
Investment in S $xxx
3. Unrealized profit 2011→ Tidak Mengakui Unrealized Profit
$120-$100=$20 Income from S $20
Investment in S $20
DOWNSTREAM SALES – Tahun 2012

INVENTORY Dividend
DR/Cash $xxx
Investment in S $xxx
1. 2011 P menjual inventory ke S Pengakuan Net Income
Investment in S $xxx
seharga $120 (harga pokok $100)
Income from S $xxx
2. Sampai akhir 2011 inventory itu Amortisasi Excess (jika ada)
belum dijual lagi oleh S Investment in S $xxx
Income from S $xxx
3. Unrealized profit 2011→ Income from S $xxx
$120-$100=$20 Investment in S $xxx
Mengakui Realized Profit
4. Asumsi dasar: INVENTORY akhir Investment in S $20
tahun 2011 itu TERJUAL pada tahun Income from S $20
berikutnya (2012) Tidak Mengakui Unrealized Profit
5. Realized profit 2012 → $20 Income from S $xxx
Investment in S $xxx
DOWNSTREAM SALES - INVENTORY
Tahun 2011
1. 2011 P menjual inventory ke S Dividend
seharga $120 (harga pokok $100) DR/Cash $xxx
Investment in S $xxx
2. Sampai akhir 2011 setengah dari Pengakuan Net Income
inventory itu belum dijual lagi oleh S Investment in S $xxx
Income from S $xxx
Amortisasi Excess (jika ada)
Investment in S $xxx
Income from S $xxx
Income from S $xxx
Investment in S $xxx
3. Unrealized profit 2011→ Tidak Mengakui Unrealized Profit
$120-$100=$20 x ½ = $10 Income from S $10
Investment in S $10
DOWNSTREAM SALES – Tahun 2012

INVENTORY Dividend
DR/Cash $xxx
Investment in S $xxx
1. 2011 P menjual inventory ke S Pengakuan Net Income
Investment in S $xxx
seharga $120 (harga pokok $100)
Income from S $xxx
2. Sampai akhir 2011 setengah Amortisasi Excess (jika ada)
inventory itu belum dijual lagi oleh S Investment in S $xxx
Income from S $xxx
3. Unrealized profit 2011→ Income from S $xxx
$120-$100=$20 x ½ = $10 Investment in S $xxx
Mengakui Realized Profit
4. Asumsi dasar: INVENTORY akhir Investment in S $10
tahun 2011 itu TERJUAL pada tahun Income from S $10
berikutnya (2012) Tidak Mengakui Unrealized Profit
5. Realized profit 2012 → $10 Income from S $xxx
Investment in S $xxx
UPSTREAM SALES - INVENTORY
Tahun 2011
1. 2011 S (80%) menjual inventory ke Dividend
P seharga $250 (harga pokok DR/Cash $xxx
$200) Investment in S $xxx
Pengakuan Net Income
2. Sampai akhir 2011 inventory itu Investment in S $xxx
belum dijual lagi oleh P Income from S $xxx
Amortisasi Excess (jika ada)
Investment in S $xxx
Income from S $xxx
Income from S $xxx
Investment in S $xxx
3. Unrealized profit 2011→ Tidak Mengakui Unrealized Profit
$250-$200=$50 Income from S $40
Investment in S $40
UPSTREAM SALES – Tahun 2012

INVENTORY Dividend
DR/Cash $xxx
Investment in S $xxx
1. 2011 S (80%) menjual inventory ke Pengakuan Net Income
P seharga $250 (harga pokok Investment in S $xxx
$200) Income from S $xxx
Amortisasi Excess (jika ada)
2. Sampai akhir 2011 inventory itu Investment in S $xxx
belum dijual lagi oleh P Income from S $xxx
3. Unrealized profit 2011→ Income from S $xxx
$250-$200=$50 Investment in S $xxx
Mengakui Realized Profit
4. Asumsi dasar: INVENTORY akhir Investment in S $40
tahun 2011 itu TERJUAL pada tahun Income from S $40
berikutnya (2012) Tidak Mengakui Unrealized Profit
5. Realized profit 2012 → $50 Income from S $xxx
Investment in S $xxx
UPSTREAM SALES - INVENTORY
Tahun 2011
1. 2011 S (80%) menjual inventory ke Dividend
P seharga $250 (harga pokok DR/Cash $xxx
$200) Investment in S $xxx
Pengakuan Net Income
2. Sampai akhir 2011 40% inventory Investment in S $xxx
itu belum dijual lagi oleh P Income from S $xxx
Amortisasi Excess (jika ada)
Investment in S $xxx
Income from S $xxx
Income from S $xxx
Investment in S $xxx
3. Unrealized profit 2011→ Tidak Mengakui Unrealized Profit
$250-$200=$50 x 40% = $20 Income from S $16
Investment in S $16
UPSTREAM SALES – Tahun 2012

INVENTORY Dividend
DR/Cash $xxx
Investment in S $xxx
1. 2011 S (80%) menjual inventory ke Pengakuan Net Income
P seharga $250 (harga pokok Investment in S $xxx
$200) Income from S $xxx
Amortisasi Excess (jika ada)
2. Sampai akhir 2011 40% inventory Investment in S $xxx
itu belum dijual lagi oleh P Income from S $xxx
3. Unrealized profit 2011→ Income from S $xxx
$250-$200=$50 x 40% = $20 Investment in S $xxx
Mengakui Realized Profit
4. Asumsi dasar: INVENTORY akhir Investment in S $16
tahun 2011 itu TERJUAL pada tahun Income from S $16
berikutnya (2012) Tidak Mengakui Unrealized Profit
5. Realized profit 2012 → $20 Income from S $xxx
Investment in S $xxx
IMPLEMENTATION OF EQUITY METHOD
Tahun 2011 Tahun 2012

Penerimaan Dividend Penerimaan Dividend

Pengakuan Net Income Pengakuan Net Income
Amortisasi Excess (jika ada) Amortisasi Excess (jika ada)

Mengakui Realized Profit 2010 Mengakui Realized Profit 2011

Investment in S $xxx Investment in S $216
Income from S $xxx Income from S $216

Tidak Mengakui Unrealized Profit 2011 Tidak Mengakui Unrealized Profit 2012
Income from S $216 Income from S $xxx
Investment in S $216 Investment in S $xxx
PREPARATION OF CONSOLIDATED
FINANCIAL STATEMENTS
CONSOLIDATED FS
Tahun Buku 2017

LK Neraca
PT ‘P” PT ‘P”
31/12/16 01/01/17
Kertas
Kerja
Konsolidasi
LK 2016 Neraca
PT ‘S” PT ‘S”
31/12/16 01/01/17

LK Konsolidasi
PT ‘P” dan AP
31/12/16
 CONSOLIDATED FS
Tahun Buku 2017

LK Neraca
PT ‘P” PT ‘P”
Books of P
31/12/16 01/01/17
Kertas
Kerja
Konsolidasi
LK 2016 Neraca
PT ‘S” PT ‘S”
Sepanjang tahun berjalan,
31/12/16 01/01/17
P membukukan transaksi
investasinya pada S
dengan menggunakan LK Konsolidasi
EQUITY METHOD PT ‘P” dan AP
31/12/16
CONSOLIDATED FS
Tahun Buku 2017

LK Neraca
PT ‘P” PT ‘P”
31/12/16 01/01/17
Kertas
Kerja
Konsolidasi
LK 2016 Neraca
Jurnal eliminasi pada
PT ‘S” PT ‘S”
Consolidation Workingpaper
31/12/16 01/01/17
BERHENTI hanya pada
working paper saja, TIDAK
LK Konsolidasi PERNAH dibukukan baik oleh
PT ‘P” dan AP P maupun S.
31/12/16
THREE ADDITIONAL
ELIMINATION ENTRIES Downstream Sales

2
Investment in S $xxx
COGS $xxx
Mengakui REALIZED PROFIT

1
yang terkandung pada Upstream Sales
persediaan AWAL TAHUN Investment in S $xxx
NCI $xxx
COGS $xxx
Mengeliminasi NILAI TOTAL

3
Downstream/Upstream Sales
Tidak mengakui UNREALIZED
Sales $xxx PROFIT yang terkandung pada
COGS $xxx
persediaan AKHIR TAHUN
COGS $xxx
Inventory $xxx
8 ELIMINATION ENTRIES … SO FAR!
Chapter 5
• Ada tambahan TIGA jurnal
eliminasi terkait dengan
intercompany transactions –
inventory

Chapter 3-4
• Ada LIMA kelompok jurnal
eliminasi.

5 Magic Steps!
DOWNSTREAM SALES
UPSTREAM SALES
 INCOME FROM S & NCI SHARE
Asumsi for 2017:
• S, a 90%-owned subsidiary, reported net income of $50,000
• Amortization of excess in Patent is $8,000
• Unrealized profit in beginning inventory is $5,000
• Unrealized profit in ending inventory is $10,000

Downstream Sales Upstream Sales

Income from S NCI Share Income from S NCI Share
Net Income of S 45,000 5,000 45,000 5,000
Amortization of excess in Patent (7,200) (800) (7,200) (800)
Realized profit in beginning inventory 5,000 0 4,500 500
Unrealized profit in ending inventory (10,000) 0 (9,000) (1,000)
32,800 4,200 33,300 3,700
INCOME FROM S & NCI SHARE
Downstream Sales Upstream Sales
Income from S NCI Share Income from S NCI Share
Net Income of S 45,000 5,000 45,000 5,000
Amortization of excess in Patent (7,200) (800) (7,200) (800)
Realized profit in beginning inventory 5,000 0 4,500 500
Unrealized profit in ending inventory (10,000) 0 (9,000) (1,000)
32,800 4,200 33,300 3,700

Original Net Income of S 50,000 Original Net Income of S 50,000

Adjustments Adjustments
• Amortization of Patent (8,000) • Amortization of Patent (8,000)
• Realized profit – Beg Inv 0 • Realized profit – Beg Inv 5,000
• Unrealized profit – End Inv 0 • Unrealized profit – End Inv (10,000)
Adjusted Net Income of S 42,000 Adjusted Net Income of S 37,000
NCI Share = 10% x 42,000 = 4,200 NCI Share = 10% x 37,000 = 3,700
SELESAI UNTUK SEMENTARA