Materi Ke 11

Intercompany Profit
Transactions — Plants Asset Part 2

Intercompany Profits On Depreciable Plant Assets…
Upstream Sales of Depreciable Plants Assets_Sale on the Affiliates
Separate Books…
Pop Corporation purchases a truck from its 80 percent–owned

subsidiary, Son Corporation, on January 1, 20x1. Other
information is as follows:
Son's reported net income for 20x1 $ 50.000
Remaining useful life of the truck at January 1, 20x1 3 years
Depreciation metthod Straight line
Trade-in value of the truck at December 31, 20x3 $ 3.000
Cost of truck to Son $ 14.000
Accumulated depreciation on truck at December 31, 20x0 $ 5.000
Separate Books…
If Son sells the truck to Pop for $12,000 cash, Son and Pop make
the following journal entries on their separate books for 20x1:
SON’S BOOKS
January 1 (sale of truck)
Cash (+A) 12,000
Accumulated depreciation (+A) 5,000
Trucks (-A) 14,000
Gain on sale of truck (Ga, +SE) 3,000
To record sale of truck.
Separate Books…
POP’S BOOKS
January 1 (purchase of truck)
Trucks (+A) 12,000
Cash (-A) 12,000
To record purchase of truck.
December 31 (depreciation expense)
Depreciation expense (E, -SE) 3,000
Accumulated depreciation (-A) 3,000
To record depreciation for one year.
[($12,000 - $3,000 scrap) , 3 years]
Separate Books…
POP’S BOOKS
December 31 (investment income)
Investment in Son (+A) 38,400
Income from Son (R, +SE) 38,400
To record investment income for 20x1 computed as follows:
Share of Son’s reported net income ($50,000 * 80%) $40,000
Less: Unrealized gain on truck ($3,000 * 80%) -2,400
Add: Piecemeal recognition of gain
[($3,000 gain, 3 years) * 80%] + 800
Investment income $38,400
Upstream Sales of Depreciable Plants Assets_Sale on Consolidation
Workpapers…
To eliminate in 20x1
a. Accumulated depreciation (A) 1,000
Depreciation expense (E, SE) 1,000
To eliminate the current year’s effect of unrealized gain from depreciation
accounts.
b. Gain on sale of truck (Ga, SE) 3,000
Trucks (A) 3,000
To eliminate unrealized gain and to reduce trucks to a cost basis.
c. Income from Son (R, SE) 38,400
Investment in Son (A) 38,400
To eliminate investment income and to adjust the investment account
to its beginning-of-the-period balance.
Workpapers…
d. Noncontrolling interest share (SE) 9,600
Noncontrolling interest (SE) 9,600
To enter noncontrolling interest share of Son’s income.
To record Noncontrolling income for 20x1 computed as follows:

Share net income ($50,000 * 20%) $10,000
Less: Unrealized gain on truck ($3,000 * 20%) - 600
[($3,000 gain, 3 years) * 20%] + 200
Noncontrolling income $9,600
Workpapers…
e. Equity of Son January 1, 20x1 (SE) 500,000
Noncontrolling interest January 1, 20x1 (SE) 100,000
To eliminate reciprocal investment and equity accounts and to establish
beginning noncontrolling interest.
Workpapers…
20x1
Workpapers…
To eliminate the effect of the 20x1 unrealized gain from current depreciation
accounts.
b. Accumulated depreciation (A) 1,000
Noncontrolling interest January 1, 20x2 (SE) 400
Trucks (A) 3,000
To eliminate the effect of 20x1 unrealized gain from accumulated
depreciation and truck accounts and to assign the unrealized gain of $2,000
at Jan 1 to the investment account (80%) and noncontrolling interest (20%).
Workpapers…
To eliminate investment income and to adjust the investment account to
its beginning-of-the-period balance.
Add: Realized gain truck for 20x1 2,400
Less: Unrealized gain on truck 20x2 ($3,000 * 80%) -2,400
[($3,000 gain, 3 years) * 80%] + 800
Workpapers…
To enter noncontrolling interest share of subsidiary income.

Share net income ($50,000 * 20%) $10,000
Add: Realized gain truck for 20x1 600
Less: Unrealized gain on truck 20x2 ($3,000 * 20%) - 600
[($3,000 gain, 3 years) * 20%] + 200
Workpapers…
Noncontrolling interest January 1, 20x2 (SE) 110,000
Workpapers…
20x2
Upstream Sales of Depreciable Plants Assets_Sale on Subsequent
Years…
To eliminate the effect of the 20x2 unrealized gain from current depreciation
accounts.
b. Accumulated depreciation (A) 2,000
Investment in Son (A) 800
Noncontrolling interest Jan 1, 20x3 (SE) 200
Trucks (A) 3,000
To eliminate the effect of 20x2 unrealized gain from accumulated
depreciation and truck accounts and to assign the unrealized gain of $1,000
at Jan 1 to the investment account (80%) and noncontrolling interest (20%).
Years…
To eliminate investment income and to adjust the investment account to
its beginning-of-the-period balance.
Add: Realized gain truck for 20x2 2,400
Less: Unrealized gain on truck 20x3 ($3,000 * 80%) -2,400
[($3,000 gain, 3 years) * 80%] + 800
Years…
To enter noncontrolling interest share of subsidiary income.

Share net income ($50,000 * 20%) $10,000
Add: Realized gain truck for 20x2 600
Less: Unrealized gain on truck 20x3 ($3,000 * 20%) - 600
[($3,000 gain, 3 years) * 20%] + 200
Years…
Noncontrolling interest Jan 1, 20x3 (SE) 120,000
Years…
20x3
Workpapers…
the following investment and equity balances—and changes in
them—as additional assumptions:
Investment in 80% of the 100% of the
Son 80% Equity of Son Equity of Son
December 31, 20x0 400.000 400.000 500.000
Income 20x1 +38,400 +40,000 +50,000
December 31, 20x1 438.400 440.000 550.000
Income 20x2 +40,800 +40,000 +50,000
December 31, 20x2 479.200 480.000 600.000
Income 20x3 +40,800 +40,000 +50,000
December 31, 20x3 520.000 520.000 650.000
Plants Assets Sold at Other Than Fair Value_Consolidation with Loss on
Intercompany Sale…
Assume that a machine had a remaining useful life of five years when it
was sold on January 1, 20x1, to Son Corporation (a 90 percent–owned
subsidiary of Pop Corporation) for $20,000.
Pop’s book value was $30,000. Pop has a $10,000 unrealized loss that is
recognized on a piecemeal basis over five years.
If Son’s net income for 20x1 is $200,000 and there are no other
intercompany transactions, Pop records its income from Son as follows:
Investment in Son (+A) 188,000
Income from Son (R, +SE) 188,000
To record income for 20x1 determined as follows:

Equity in Son’s income ($200,000 * 90%) $180,000
Add: Unrealized loss on machine 10,000
Less: Piecemeal recognition of loss ($10,000, 5 years) (2,000)
$188,000
20x1
Machinery (A) 10,000
Loss on sale of machinery (Lo, SE) 10,000
To eliminate unrealized intercompany loss on downstream sale.

Accumulated depreciation (A) 2,000
To increase depreciation expense to reflect depreciation on a cost basis.
20x2
Machinery (A) 10,000
Accumulated depreciation (A) 4,000
To eliminate the effects of intercompany sale at a loss.
How about consolidation working paper?
Now, its your turn

Pam Corporation acquired a 90 percent interest in Sun Corporation at its

underlying book value (equal to fair value) of $450,000 on January 3,
20x1. Since Pam Corporation acquired its interest in Sun, the two
corporations have participated in the following transactions involving
plant assets :
1.On July 1, 20x1, Pam sold land to Sun at a gain of $5,000. Sun resold
the land to outside entities during 20x3 at a loss to Sun of $1,000.
2.On January 2, 20x2, Sun sold equipment with a five-year remaining
useful life to Pam at a gain of $20,000. This equipment was still in use
by Pam at December 31, 20x3.
Pam Corporation acquired a 90 percent interest in Sun Corporation at its

underlying book value (equal to fair value) of $450,000 on January 3,
20x1. Since Pam Corporation acquired its interest in Sun, the two
corporations have participated in the following transactions involving
plant assets :
3.On January 5, 20x3, Pam sold a building to Sun at a gain of $32,000.
The remaining useful life of the building on this date was eight years,
and Sun still owned the building at December 31, 20x3.
Sun reports net income 20x3 $80,000 and dividends $30,000.

Per December 20x2, Sun's equity 600,000.
a. Investment in Sun (A) 5,000
Gain on land (Ga, SE) 5,000
To recognize previously deferred gain on land.
b. Investment in Sun (A) 14,400
Noncontrolling interest Jan 1, (SE) 1,600
Accumulated depreciation—equipment (A) 8,000
Equipment (A) 20,000
To eliminate unrealized profit on upstream sale of equipment
and eliminate current year’s effect of unrealized gain from

c. Gain on buildings (Ga, SE) 32,000
Accumulated depreciation—buildings (A) 4,000
Buildings (A) 32,000
To eliminate unrealized gain on the downstream sale of buildings
and eliminate current year’s effect of unrealized gain from
depreciation accounts.

d. Income from Sun (R, SE) 52,600
Dividends (SE) 27,000
Investment in Sun (A) 25,600
To eliminate income and dividends from subsidiary.
Share of Sun’s reported net income ($80,000 * 90%) $72,000
Add: Realized gain on land for 20x3 5,000
Less: Unrealized profit on building 20x3 -28,000
Add: Piecemeal recognition of gain equipment
[($20,000 gain, 5 years) * 90%] 3,600

e. Noncontrolling interest share (SE) 8,400
Dividends (SE) 3,000
To enter noncontrolling interest share of subsidiary income & dividends.
Share of Sun’s reported net income ($80,000 * 10%) $8,000
Less: Unrealized gain on building 20x3 ($32,000 * 10%) -3,200
Add: Realized gain truck for 20x3 ($32,000 * 10%) 3,200
Add: Piecemeal recognition of gain equipment
[($20,000 gain, 5 years) * 10%] 400

f. Retained earnings—Sun (SE) 200,000
Capital stock—Sun (SE) 400,000
Investment in Sun (A) 540,000
Noncontrolling interest—beginning (SE) 60,000
To eliminate reciprocal investment and equity balances
and establish noncontrolling interest at beginning of year.
20x3
TERIMA KASIH
Ayat Dalam Alquran terkait Materi…
َ َٰ ِ‫ل إِ ََّلَٰٓ أَن تَكُونَ ت‬
‫ج َر ًة‬ ‫ط‬
ِ َ َٰ
‫ب‬ ْ
‫ل‬ ‫ٱ‬ِ ‫ب‬ ‫ُم‬ ‫ك‬ ‫ن‬َ ‫ي‬
ْ َ ‫ب‬ ‫م‬ ‫ك‬
ُ َ ‫ل‬‫و‬َ َٰ ‫م‬
ْ َ ‫أ‬ ۟
‫ا‬ ‫و‬
َٰٓ ُ
‫ل‬ ‫ك‬
ُ ْ
‫أ‬ َ ‫ت‬ َ
‫َل‬ ۟
‫وا‬ ‫ن‬
ُ ‫م‬
َ ‫ا‬‫ء‬َ ‫ين‬
َ ‫ذ‬
ِ َّ ‫ل‬‫ٱ‬ ‫ا‬ ‫ه‬
َ ُّ ‫ي‬َ ‫أ‬َٰٓ َ‫و َٰي‬
ِ
‫ما‬
ً ‫حي‬ ْ ‫ن ٱلل َّ َ َكانَ بِك‬
ِ ‫ُم َر‬ َّ ِ‫ُم ۚ إ‬ ْ ‫سك‬ َ ‫ُم ۚ َو ََل تَ ْق ُت ُل َٰٓو ۟ا أَن ُف‬ْ ‫اض ِمنك‬ٍ ‫َعن تَ َر‬
Yā ayyuhallażīna āmanụ lā ta`kulū amwālakum bainakum bil-
bāṭili illā an takụna tijāratan 'an tarāḍim mingkum, wa lā
taqtulū anfusakum, innallāha kāna bikum raḥīmā (QS An-Nisa-
ayat-29)
“Hai orang-orang yang beriman, janganlah kamu saling
memakan harta sesamamu dengan jalan yang batil, kecuali
dengan jalan perniagaan yang berlaku dengan suka sama-suka
di antara kamu. Dan janganlah kamu membunuh dirimu;
sesungguhnya Allah adalah Maha Penyayang kepadamu (QS- 1
An-Nisa-ayat-29)”.

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Intercompany Profit

Transactions — Plants Asset Part 2

Pop Corporation purchases a truck from its 80 percent–owned

To record Noncontrolling income for 20x1 computed as follows:

To record Noncontrolling income for 20x2 computed as follows:

To record Noncontrolling income for 20x3 computed as follows:

To record income for 20x1 determined as follows:

Depreciation expense (E, SE) 2,000

How about consolidation working paper?

Now, its your turn

Pam Corporation acquired a 90 percent interest in Sun Corporation at its

Pam Corporation acquired a 90 percent interest in Sun Corporation at its

Sun reports net income 20x3 $80,000 and dividends $30,000.

Sun reports net income 20x3 $80,000 and dividends $30,000.

Sun reports net income 20x3 $80,000 and dividends $30,000.

Sun reports net income 20x3 $80,000 and dividends $30,000.

Sun reports net income 20x3 $80,000 and dividends $30,000.

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