F4 - M6 - Intercompany Transactions

Question 1

Eliminating Intercompany Transactions - Eliminate ____ percent, regardless of whether there is a _______interest.

Answer 1

100%, noncontrolling interest.

Question 2

Eliminate all intercompany accounts. For example, simple income statement eliminations include ____revenue and ____expense, and simple balance sheet eliminations include interest receivable and interest payable.

Answer 2

interest revenue and interest expense

Question 3

Intercompany inventory transactions require the elimination of the intercompany _____, intercompany ___________, and any intercompany _____ on the inventory transactions.

Answer 3

intercompany sales, intercompany cost of goods sold, and any intercompany profit

Question 4

The elimination of intercompany profit is allocated between the purchaser’s ______ and ____________

Answer 4

ending inventory and cost of goods sold

Question 5

Intercompany bond transactions require the _______________ from the issuer’s balance sheet and the investment in bonds account from the balance sheet of the investor. Do not assume that the issuer sold these bonds directly to the investor.

Answer 5

elimination of the bonds payable account

Question 6

Intercompany transactions involving land require an elimination making the consolidated financial statements look as though the transaction had never occurred. Put the land account________ that had been in the seller’s books and also eliminate the__________.

Answer 6

Put the land account back to the value ; gain/loss

Question 7

Intercompany transactions involving depreciable assets involve essentially the same steps as for land, but with two complications. There is an _________ account that has to be put back where it was at the time of the intercompany transaction,

Answer 7

accumulated depreciation

Question 8

________ expense after the sale must be adjusted back to what it would have been had the transaction never occurred.

Answer 8

Depreciation