Professional Documents
Culture Documents
Chapter 3
An Introduction to
Consolidated Financial
Statements
Steps:
– Elimination entries of reciprocal accounts
– Combining parent-susidiary’s accounts , such
as parent-subsisiary ‘s cash, liabilities, etc
– Presenting consolidated accounts on
consolidated financial statement based on
accounting regulation
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Balancesheet PT A and PT B 31/12/2011 (in Rp.
000)
Accounts PT A PT B
Cash 750 1.000
Trade Receivables 4.000 2.000
Inventories 6.750 3.000
Investment on PT B 12.500
Information:
a. PT A has trade receivable Rp 3.000.000 from PT B
b. PT A’s acquired 100% shares of PT B.
Accounts Consolidate
d
Cash 750 + 1.000 Rp 1.750
Trade Receivables 4.000 + 2.000 – 3000 (eliminated 3.000
Inventories 6.750 + 3.000 9.750
Investment on stock 12.500 – 12.500 (eliminated) -
Buildings and Equipment 7.000 + 6.000 13.000
(net)
Land 9.000 + 9.000 18.000
Total Asset 45.500
Trade Liabilities 5.000 + 3.500 – 3.000 (eliminated) 5.500
Long term Liabilities 10.000 + 5.000 15.000
Capital Stock 15.000 + 7.500 –7.500 (eliminated) 15.000
Retained Earnings 10.000 + 5.000 – 5.000 (eliminated) 10.000
Total liabilities and Rp 45.500
equities
• elimination entries
or
Assets
Cash $ 20 $ 20 blank blank $ 40
Retained
____ 20 a 20 ____ ____
earnings―Son
a. To eliminate reciprocal investment and equity accounts and to assign the excess of investment cost (fair value) over book value to
goodwill.
Beginning Ending
Current year's
blank unamortized unamortized
amortization
excess excess
Plant 60 (15) 45
Liabilities (5) 1 (4)
Goodwill 35 0 35
Total 90 (14) 76
Beginning Ending
Current year's
blank unamortized
amortization
unamortized
excess excess
Inventory 10 (10) 0
Land 20 0 20
Total 30 (10) 20
$571.50 x .10/.90
= $63.50