Transaksi antar Perusahaan Afiliasi 3: Penjualan / Pembelian Persediaan Arus ke Atas

Summary

This video discusses intercompany transactions, focusing on the sales and purchases of inventory between parent companies and subsidiaries. It covers two scenarios: one with 100% ownership and another with less than 100% ownership of the subsidiary. The video explains how to eliminate intercompany profits, adjusting the inventory balances and equity accounts in the financial statements, with examples of journal entries for both full and partial ownership cases. The presenter emphasizes the method of equity accounting and the need for eliminations to prevent the overstatement of profits within consolidated financial statements.

Takeaways

• 😀 The video explains intercorporate transactions between affiliated companies, specifically focusing on sales and purchases of inventory between a parent company and its subsidiary.
• 😀 The first example discusses a downward sale where the parent company sells to its subsidiary, while the second example focuses on an upward sale where the subsidiary sells to the parent company.
• 😀 In the first example, the parent company owns 100% of the subsidiary, meaning full recognition of sales and profits by the parent company in its accounting records.
• 😀 The second example illustrates a situation where the parent company owns less than 100% of the subsidiary (60% in this case), and the equity method is used to account for the subsidiary's sales and profits.
• 😀 When the parent company owns 100% of the subsidiary, the elimination of inventory transactions results in adjustments to both the subsidiary's and parent company's accounts, including inventory and retained earnings.
• 😀 In the case of 60% ownership, the parent company's share of profits from the subsidiary's sales is recognized proportionally (60%), and the remainder (40%) is considered the share of minority interests.
• 😀 Journal entries for the elimination of intercompany inventory transactions include reducing inventory, eliminating the investment account, and adjusting the retained earnings balances of both companies.
• 😀 The example shows that under the equity method, profits from intercompany sales are recognized by both the parent and subsidiary but adjusted based on the ownership percentage.
• 😀 The adjustments for intercompany sales include eliminating unrealized profits in inventory that are not yet sold to external parties, ensuring that consolidated financial statements reflect only external sales.
• 😀 The video emphasizes the importance of using the equity method to accurately account for the profits from intercompany sales when the parent company does not own 100% of the subsidiary, adjusting for both the parent and the minority shareholders.

Q & A

What is the main focus of the video script?

The main focus of the video script is on intercompany transactions and the elimination of these transactions in financial statements, specifically dealing with inventory sales between a parent company and its subsidiary.

What is meant by 'intercompany transaction elimination' in accounting?

Intercompany transaction elimination refers to the process of removing transactions between a parent company and its subsidiary from the consolidated financial statements to avoid inflated profits or assets that result from internal sales or purchases.

What are the two main scenarios discussed for intercompany sales?

The two main scenarios discussed are when the parent company owns 100% of the subsidiary (full ownership) and when the parent company owns less than 100% of the subsidiary (partial ownership).

How does the ownership percentage impact the elimination process?

The ownership percentage determines how the profits from intercompany sales are recognized. In the case of full ownership, the entire profit is eliminated, whereas, with partial ownership, only the parent company’s share of the profit is recognized, and the remaining portion is attributed to minority interests.

What happens in the case of 100% ownership between the parent and the subsidiary?

In the case of 100% ownership, all intercompany transactions are eliminated, including the investment in the subsidiary and the equity accounts (capital and retained earnings) from both the parent and the subsidiary.

How are the journal entries made for intercompany inventory sales when there is 100% ownership?

The journal entries involve eliminating the inventory balance in the subsidiary, eliminating the investment in the subsidiary, and eliminating the share capital and retained earnings to ensure no profit is recognized from internal transactions.

In a scenario with less than 100% ownership, how is the profit from the intercompany sale handled?

When the parent company owns less than 100% of the subsidiary, the parent recognizes only its proportionate share of the profit from the intercompany sale. The remaining profit is recognized as a minority interest.

What is the role of minority interest in the elimination process?

Minority interest represents the portion of the profit or equity that belongs to other shareholders in the subsidiary, and it must be accounted for when the parent does not own 100% of the subsidiary.

How are the journal entries structured when the parent owns 60% of the subsidiary?

The journal entries involve eliminating the inventory balance, recognizing the parent’s share of the profit (60%), and eliminating the investment, capital, and retained earnings accounts, proportionately to the parent’s share of ownership.

What are the key concepts to remember when eliminating intercompany transactions?

Key concepts include the elimination of internal sales profits, adjusting for minority interest when the parent owns less than 100% of the subsidiary, and ensuring that the consolidated financial statements reflect only external transactions between the group and outside parties.