Working Paper Entries

1 Ordinary share capital xx

Share premium xx
Retained earnings xx
Investment in subsidiary xx
Non-controlling interest xx
To eliminate the subsidiary's shareholders' equity.

2 Equipment xx
Land xx
Merchandise inventory xx
Investment in subsidiary xx
Non-controlling interest xx
To update the fair values of subsidiary's net assets.

3 Goodwill xx
Investment in subsidiary xx
Non-controlling interest xx
To recognize the result of business combination.

4 Merchandise inventory xx
Cost of sales xx
Retained earnings xx

Operating expenses (depreciation) xx

Retained earnings xx
Accumulated depreciation xx

Operating expenses (impairment) xx

Retained earnings xx
Goodwill or accumulated impairment xx

To record the amortization and impairment.

5 NCI share in net income of subsidiary xx

Retained earnings xx
Non-controlling interest xx
To record the share of NCI in the net income of subsidiary.

6 Dividend income xx
Non-controlling interest xx
Dividends declared xx

Non-controlling interest xx
Retained earnings xx
To eliminate intecompany dividends.

7 Sales xx
Cost of sales xx
To eliminate intecompany sales of merchandise.
8 Accounts payable xx
Accounts receivable xx
To eliminate intecompany AR and AP.

9 Retained earnings xx
Cost of sales xx
To realize profit from beginning inventory.

10 Retained earnings xx
Patent, net (coz no info given as to the original cost) xx
To eliminate unrealized intercompany gain on patent's sale.

11 Gain on sale on long-term assets xx

Equipment (coz no info on original
cost) xx
To eliminate unrealized intercompany gain on equipment's sale.

12 Accumulated amortization xx
Retained earnings xx
Operating expenses (amortization) xx
To recognize the realized gain from usage.

13 Accumulated depreciation xx
Operating expenses (depreciation) xx
To recognize the realized gain from usage.

14 The unrealized intercompany loss on

the sale of land was automatically
eliminated by the subsequent sale to
the outside party.