INTERCOMPANY SALE INTERCOMPANY SALE of INVENTORY Subsidiary’s NA @ FV

x NCI %
(Current yr) Downstream – not allocated, (only RE is affected) NCI in NA – 12/31
Sales price of IS Upstream – allocated to P and S (RE and NCI are affected)
Less:COS
Profit from IS Step 1: Analysis of Intercompany transaction
x Unsold portion Step 5 - CONSOLIDATED RETAINED EARNINGS
UNREALIZED GP IN EI Find:
Consolidated EI Parent’s RE – 12/31
(Prior yr) Consolidated Sales Parent’s chare in the net change od subsidiary’s NA
Sales price of IS Consolidated COS Less: Unrealized Profit (DW)
COS Consolidated GP CONSOLIDATED RETAINED EARNINGS
Profit from IS
x Unsold portion FVA Step 6,Conso Profit or Loss
Realized GP in BI
FVA – 1/1 UL Depre FVA 12/31 P S Conso

Profits before adj

EI of Parent Effects of IT
EI of Subsidiary Unrealized profit (S1)
Less: Unrealized profit in EI Step 2: Subsidiary’s Net Assets Profits before FVA
Consolidated EI Depreciation of FVA
Sub 1/1 12/31 NeTchange CONSOLIDATED profit
NE @ CA X x
FVA x x
Less:Unrelaized profit x
Sales of Parent Owners NCI Conso
(UP) x x
Sales of Subsidiary of Parent
NET ASSETS @ FV
Less: IS
CONSOLIDATED SALES x Parent’s profit before FVA
Share in subsidiary’s profit before
Depreciation of FVA
Step 3: Goodwill TOTALS
COS of Parent
COS of Subsidiary CT
Less: IS NCI
Add: Unrealized profit EI PHEI
Less: Realized profit in BI Total
Add: Depreciation of FVA on inventory FV NIAA (step 2)
CONSOLIDATED COS Goodwil – 1/1
Less: Imp loss
Goodwill – 12/31

Consolidates Sales
Less: Consolidates COS Step 4 NCI in NE
CONSOLIDATED GROSS PROFIT NIA,ends (Sub- total equity)
x NCI %
NCI in NA – 12/31
INTERCOMPANY SALES OF PPE Less:Unrelaized profit x Parent
(UP) x x Parent’s profit before FVA
PPE – HC NET ASSETS @ FV Share in subsidiary’s profit before FVA
Overstatement Depreciation of FVA
x TOTALS
Eq FVA
Consolidated EQ
INTERCOMPANY BOND TRANSACTION
Step 3: Goodwil
Acc dep
Understatement  Eliminate – Investment in Bonds, Bonds Payable,
CT
Acc dep before FVA Interest Exp, Interest Income recognized after
NCI
Fva 12/31 11:59 intercompany transaction
PHEI
CONSOLIDATED Acc. Dep  Recognize – gain or loss on extinguishment
Total
FV NIAA (step 2)
Goodwil – 1/1 STEP 1 – Analysis of Intercompany Transaction
Less: Imp loss
Depreciation Goodwill – 12/31 Carrying amount of bonds payable acquired
Overstatement Less: Acquisition Cost of bonds (retirement price)
Depriciation before FVA GAIN ON EXTINGUISHMENT OF BONDS
FVA dep Step 4 NCI in NE
Consolidated depreciation NIA,ends (Sub- total equity) *Interest income recognized by S = eliminated
Subsidiary’s NA @ FV x NCI % *Interest expense recognize by P = eliminated
x NCI % NCI in NA – 12/31
NCI in NA – 12/31 STEP 2 – SUBSIDIARYS NET ASSET
Paren’s Eq, met
Sub’s Eq, met Step 5 – Conso Retained Earnings FVA – 1/1 UL Depre FVA 12/31
FVA, NET, 12/31
Deferred gain
Parent’s RE – 12/31
Consolidated Eq, net
Parent’s chare in the net change od subsidiary’s NA
less: Deferred Gain
CONSOLIDATED RETAINED EARNINGS
Sub 1/1 12/31 Net
Step 1: Analysis of Intercompany transaction Change
Step 6 - Conso Profit or Loss NE @ CA X x
FVA FVA x x
P S Conso Less: Interest Income x
NET ASSETS @ FV x x
FVA – 1/1 UL Depre FVA 12/31 Profits before adjustment
Effects of IT
Deferred gain (S5) x
Profits before FVA
Depreciation of FVA STEP 3 –
Step 2: Subsidiary’s Net Assets CONSOLIDATED PROFIT
Step 3: Goodwil
Sub 1/1 12/31 NeTchange
NE @ CA X x Owners NCI Conso CT
FVA x x of NCI
 PHEI
Total
Total Assets of P Total liabilities of P
FV NIAA (step 2) Step 3: Goodwill
Total Assets of S Total Liabilities of S
Goodwil – 1/1
Investment in Sub FVA ,net
FVALess:
net Imp loss CT
Effect of intercompany
Goodwill
Goodwill, net– 12/31 NCI
transaction – bonds payable
Effect of intercompany transaction
CONSOLIDATED TOTAL LIABILITES
PHEI
– Investment in bonds Total
CONSOLIDATED TOTAL ASSETS FV NIAA (step 2)
Goodwil – 1/1
Step 4 NCI in NE NIA,ends (Sub- total equity) INTERCOMPANY DIVIDENDS Less: Imp loss
x NCI % Goodwill – 12/31
Subsidiary’s NA @ FV NCI in NA – 12/31
Investment in Subsidiary is measured at Cost/PFRS 9
x NCI %
-dividends received are recognized in P/L
NCI in NA – 12/31
Investment in Subsidiary measures using Equity Method
-dividends received from subsidiary are recognized as reduction NIA,ends (Sub- total equity)
Step 5 – Conso Retained Earnings Step 4 NCI in NE
to CA of investment x NCI %
Parent’s RE – 12/31 Subsidiary’s NA @ FV NCI in NA – 12/31
Dividends must be eliminated
Parent’s share in the net change od subsidiary’s NA a. Dividends in P/L x NCI %
Interest Expense – eliminate the dividend income in Conso P/L NCI in NA – 12/31
Gain on extinguishment of bonds - no longer need to eliminate in the RE
CONSOLIDATED RETAINED EARNINGS b. Dividends – as a reduction to investment account Step 5 – Conso Retained EarningsParent’s RE – 12/31
-add back dividends to investment account Parent’s chare in the net change od subsidiary’s NA
Step 6 - Conso Profit or Loss CONSOLIDATED RETAINED EARNINGS

P S Conso Step 1: Analysis of Intercompany transaction Step 6 - Conso Profit or Loss

Profits before adjustment Dividends declared is allocated P S Conso

Effects of IT:
Interest Income (less) Profits before adjustment
Interest Expense Effects of IT
Gain on extinguishment of bonds Step 2: Subsidiary’s Net Assets
Dividend Income (deducted-P)
Profits before FVA CONSOLIDATED PROFIT
Depreciation of FVA Sub 1/1 12/31 NeTchange
CONSOLIDATED PROFIT NE @ CA X x
FVA x x
NET ASSETS @ FV x x Owners NCI Conso
Owners NCI Conso of
of Parent
Parent Parent’s profit before FVA
Parent’s profit before FVA Share in subsidiary’s profit before FVA
Share in subsidiary’s profit before FVA Depreciation of FVA
Depreciation of FVA FVA – 1/1 UL Depre FVA 12/31 TOTALS
TOTALS
 EFFECTS IN SNIA

Beg End Net

Change
Net Assets @ CA xx xx
FVA xx xx
UPSTREAM transaction: EFFECTS IN P/L
UP-IT-Inventory (xx)
Unamortized DG-IT-PPE (xx) Parent Subsidiary
Interest Income (xx)
NET ASSETS @ FV XX Profit xx xx
UPEI (DW) (xx)
UPEI (UP)
XX DG (DW) (xx)
(xx)
XX Amortized (DW)
DG (UP) xx
Amortized (DW)
Dividend Income (xx)
Interest Income xx
EFFECTS IN RE Interest Expense (xx)
Dep FVA SNIA (xx)
Impairment of GW (@PS) xx
Impairment of GW (@FV)
Parent’s Retained Earnings xx ADJUSTED P/L (xx)
+ Share of P in net change of SNIA xx (xx)
Downstream Transactions:
Interest Expense (xx)
Gain on Extinguishment xx XX XX
xx
Other Gain
Share in the Imp Loss xx
(xx)
CONSOLIDATED RE
XX

Owners N Cons
of Parent CI o
Parent’s profit xx
Subsidiary’s Profit xx
xx
CONSOLIDATED P/L XX
XX