Chap006_Day1_class

Chap006_Day1_class - Review of Consolidation Parent...

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1 Review of Consolidation Parent Sub Unrelated Co.
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2 Intercompany Transactions ± Chapters 4&5: intercompany stock ownership ± Chapter 6: intercompany transfer of fixed assets ± Chapter 7: intercompany transfer of inventory ± Chapter 8: intercompany debt-holdings
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Chapter 6 Part I Intercompany Transfers (Nondepreciable, Noncurrent Assets) ± Overview – upstream vs downstream ± Elimination entries ² year of transfer ² subsequent years ² subsequent sale externally ± Problems ² Today: E6-3 ² Next Class: E6-7. E6-2 (question 1), P6-29 (questions 2, 3, 4), E6-13
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4 Overview - Nondepr., Noncurr. Assets Downstream Intercompany Sales Upstream Nondepreciable Eliminate 100% of gain against parent company Recognize full gain on final sale Eliminate 100% of gain proportionately against controlling and noncontrolling interests Recognize gain proportionately on final sale All years After Internal Transfer Year of External Sale
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5 Overview - Nondepr., Noncurr. Assets Downstream Intercompany Sales Upstream Nondepreciable Eliminate 100% of gain against parent company Recognize full gain on final sale Eliminate 100% of gain proportionately against controlling and noncontrolling interests Recognize gain proportionately on final sale All years After Internal Transfer Year of External Sale
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6 Overview - Nondepr., Noncurr. Assets Downstream Intercompany Sales Upstream Nondepreciable Eliminate 100% of gain against parent company Recognize full gain on final sale Eliminate 100% of gain proportionately against controlling and noncontrolling interests Recognize gain proportionately on final sale All years After Internal Transfer Year of External Sale
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This note was uploaded on 10/14/2009 for the course MGMT 503 taught by Professor Staff during the Spring '08 term at Purdue.

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Chap006_Day1_class - Review of Consolidation Parent...

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