The intercompany transactions occur when the unit of legal entity is having transactions with another unit of the similar entity. This transaction can be divided into two categories such as direct and indirect intercompany transfer. The direct transfer occurs when there is transfer between the different units of the same entity and indirect transfer occurs when the unit of entity acquires debt or assets issued to unrelated entity through another unit of the same entity. This type of transfer will help the entity in improving the flow of finance and asset in efficient manner. Requirement 1 To Prepare: We have to prepare a memo detailing the consolidation procedure that need to be followed while transferring the equipment between parent and subsidiary.

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Chapter 7, Problem 7.1C

To determine

Concept Introduction:

The intercompany transactions occur when the unit of legal entity is having transactions with another unit of the similar entity. This transaction can be divided into two categories such as direct and indirect intercompany transfer. The direct transfer occurs when there is transfer between the different units of the same entity and indirect transfer occurs when the unit of entity acquires debt or assets issued to unrelated entity through another unit of the same entity. This type of transfer will help the entity in improving the flow of finance and asset in efficient manner.

Requirement 1

To Prepare:

We have to prepare a memo detailing the consolidation procedure that need to be followed while transferring the equipment between parent and subsidiary.

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