Intercompany Sales of Merchandise Classroom Illustration Instructor Version Summer I 2009

Intercompany Sales of Merchandise Classroom Illustration Instructor Version Summer I 2009

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Accounting 401 Intercompany Inventory Transfers Brief Class Notes and Exercise Summer I 2009 A. Intercompany sales of merchandise – Unrealized Profit in Ending Inventory of Purchasing Affiliate 1. Remember that inventory transactions affect both the income statement and the balance sheet. 2. It is extremely important for you to review the inventory accounting you learned in Principles of Financial Accounting and Intermediate Accounting. 3. If you understand intercompany transactions involving non-depreciable assets, you should have very little difficulty understanding the accounting intercompany sales of merchandise. The general principles are very similar, but the accounts used are much different. 4. Once again, we will assume that parent companies are using the equity method to account for their subsidiaries. If we find the time, it would be nice to discuss what happens if the parent uses the initial value method instead of the equity method. Illustration:
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This note was uploaded on 03/09/2012 for the course ACCT 401 taught by Professor Staff during the Summer '08 term at Texas A&M.

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Intercompany Sales of Merchandise Classroom Illustration Instructor Version Summer I 2009

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