CH 15.docx - So GAAP says if it controls 100 of the assets...

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So GAAP says, if it controls 100% of the assets and liabilities, we must show what they control on the consolidated financial statement eve n though they don't own100% of it. So we're going to show you how that works with respec t to an intercompany inventory sale, and we're going to show what happens if we have-- wh en wehave the reduction of ending inventory for deferred profit, which is always going to a ffect the cost of goods sold. We know the cost of goods sold fully. Beginninginventory plus purchases minus ending inventory equals cost of goods sold. When inventory is transferre d to an unaffiliated party, somebody outside theconsolidated group, then all the deferred p rofit has to be recognized. And it's done through a decrease in the cost of goods sold. An upstream sale deferred profit inventory adjustments affect the non-controlling interest balances because the non-controlling interest in a upstream sale areowned partly by the parent and partly by the non-controlling sharehold ers. Remember, upstream is that-- when a subsidiary sells to a parent. So imagine if you'rea
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  • Spring '14
  • Generally Accepted Accounting Principles, respec

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