The consolidation process required for the intra-entity transfer of depreciable assets is different from the requirements for
Question:
The consolidation process required for the intra-entity transfer of depreciable assets is different from the requirements for inventory and land. Analyze the current consolidation process for an intra-entity transfer of depreciable assets and suggest at least one (1) improvement to the process.
Provide an example to support your recommendation. Assume that company P (parent) uses the equity method to account for its investment in company S (subsidiary).
Company P purchases inventory items from company S.
According to FASB’s guidance, the accountant must remove the inter-company profit from Company S’s net income.
Evaluate the consolidation process for inventory transfers between the parent and subsidiary and describe the process for eliminating profit from the non-controlling interest.
Determine if the process permanently eliminates the profit from the non-controlling interest or merely shifts the profit from one period to the next. Provide support for your rationale.
Fundamental accounting principle
ISBN: 978-0078025587
21st edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta