
Concept explainers
Introduction: Intercompany transfers occur when related companies purchases services from each other. When one company purchases services from an associated company both will record this transaction, the purchaser recordas an expense and the seller records revenue. This revenue and expense must be eliminated for the purpose of consolidation. All revenue and expenses of both the companies are included in financial statements for the purpose of calculating net income.
Computation of consolidated net income for GD services for 20X3.
b
Introduction: Intercompany transfers occur when related companies purchases services from each other. When one company purchases services from an associated company both will record this transaction, the purchaser record as an expense and the seller records revenue. This revenue and expense must be eliminated for the purpose of consolidation. All revenue and expenses of both the companies are included in financial statements for the purpose of calculating net income.
c
Introduction: Intercompany transfers occur when related companies purchases services from each other. When one company purchases services from an associated company both will record this transaction, the purchaser record as an expense and the seller records revenue. This revenue and expense must be eliminated for the purpose of consolidation. All revenue and expenses of both the companies are included in financial statements for the purpose of calculating net income.
Consolidation entries for preparing consolidated work sheet for the year ended 31 December 20X3.

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Chapter 7 Solutions
Advanced Financial Accounting
- Creditors Sales Revenue 22,500 1,143,700 Land at cost 550,000 Building at cost 570,000 Furniture and fittings at cost 85,000 Bank 14,000 Provision for Depreciation Buildings 120,000 Furniture and fittings 15,000 Discounts 5,700 5,800 Retained Earnings at 1 Oct 2022 14,800 Provision for bad debts 2,200 Goodwill 400,000 Cash 16,400 Inventory at 1 Oct 2022 48,000 Rent Received(from Breezy Ltd) 27,000 Rent 7,900 Wages and Salaries 122,000 Insurance 16,300 Carriage Inwards 2,300 Returns 8,500 12,000 Commission received 5,200 8% Mortgage 100,000 Other Operating Expenses 2,500 Debtors 45,000 Purchases 340,000 Debenture Interest 1,200 Mortgage Interest 4,600 Bad debt 4,700 7% Debentures 150,000 4% Preference Shares @ $0.5 130,000 Ordinary Shares @ $0.75 375,000 General Reserves 127,000 Interim ordinary dividends paid 4,500 2,249,400 2,249,400arrow_forwardI need help with this general accounting problem using proper accounting guidelines.arrow_forwardCan you explain this general accounting question using accurate calculation methods?arrow_forward
- Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
