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Hi guys, i’ve put together the table below to try and help me with the confusing topic of intra-group transactions.
Please feel free to correct/fill-in any bits you can.
Stock Outstanding at year end
Parent Selling to Subsidiary
DR Group Retained Earnings
CR Group Inventory (SFP)Parent Selling to Associate
DR Group Retained Earnings / Reserves
CR Investment in AssociateSubsidiary Selling to Parent
DR Cost of Sales / Retained Earnings ?
CR Inventory of SubsidiaryOR
DR Revenue
CR COSSubsidiary Selling to Associate
???Associate Selling to Parent
DR Retained Earnings
CR InventoryAssociate Selling to Subsidiary
DR Group Retained Earnings
CR Inventory (group)Balance outstanding at year end
Parent Selling to Subsidiary
???
Parent Selling to Associate
???Subsidiary Selling to Parent
???Subsidiary Selling to Associate
???
Associate Selling to Parent
???Associate Selling to Subsidiary
???Dividend Payments
Parent to Subsidiary
???Parent to Associate
???Subsidiary to Parent
Cancelled on consolidation
Reduce in parents
Increase reserve of subsidiarySubsidiary to Associate
???Associate to Parent
Dividends from associates are included in investment in associate total.
You can also include in Current AssetsAssociate to Subsidiary
???you haven’t gone wrong. Subsidiary to parent is the same logic as parent to subsidary.
What is balance outstanding at year end… does this relate to the trade and receivable accountsHi,
Just looking at your comments for the following:
Subsidiary Selling to Parent
DR Revenue
CR COSThis is correct, after which you record the PUP adjustment which is:
DR Cost of sales/retained earnings
CR InventoryYou’re on the right track, these adjustments can get confusing but just try and remember the treatment principle and do lots of practice questions
Richieinspain, balance outstanding at year end, by that i’m saying if the transaction has taken place (inventory sold & bought), but the buying party havent paid for it and payment is still outstanding at y/end (this can be either that the buyer hasnt paid any money for the inventory, or part-paid the inventory, for example, bought goods worth $100, but only paid $50 so far).
If i’m not mistaken then any balance outstanding between parent & subsidiary is deducted from Trade Payables & Trade Receivables?
If so, then what about if balance is outstanding between parent & associate?
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