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    Yap - ACP312 - ULOa - in A Nutshell

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    Junzen Ralph Yap
    The document discusses the accounting procedures for intercompany sales of property, plant, and equipment between affiliated entities, noting that any gains or losses are deferred until the asset is sold to an outside party, and the gain or loss is amortized over the useful life of the asset; it also explains the differences between downstream and upstream sales and how they affect controlling and non-controlling interests.

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    Yap - ACP312 - ULOa - in A Nutshell

    Uploaded by

    Junzen Ralph Yap
    24 views1 page
    The document discusses the accounting procedures for intercompany sales of property, plant, and equipment between affiliated entities, noting that any gains or losses are deferred until the asset is sold to an outside party, and the gain or loss is amortized over the useful life of the asset; it also explains the differences between downstream and upstream sales and how they affect controlling and non-controlling interests.

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    Yap_ACP312_ULOa_In a Nutshell

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    The document discusses the accounting procedures for intercompany sales of property, plant, and equipment between affiliated entities, noting that any gains or losses are deferred until the asset is sold to an outside party, and the gain or loss is amortized over the useful life of the asset; it also explains the differences between downstream and upstream sales and how they affect controlling and non-controlling interests.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    24 views1 page

    Yap - ACP312 - ULOa - in A Nutshell

    Uploaded by

    Junzen Ralph Yap
    The document discusses the accounting procedures for intercompany sales of property, plant, and equipment between affiliated entities, noting that any gains or losses are deferred until the asset is sold to an outside party, and the gain or loss is amortized over the useful life of the asset; it also explains the differences between downstream and upstream sales and how they affect controlling and non-controlling interests.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    You are on page 1of 1

    Jun Zen Ralph V.

    Yap BSA – 3rd Year

    In a Nutshell

    Activity 1.Based from the definition of the most essential terms in the course and the
    learning exercises that you have done, please feel free to write your arguments or
    lessons learned below. I have indicated my arguments or lessons learned.

    1. Consolidation process for intercompany sale of fixed assets has similar


    accounting procedures with sale of inventories. Realized gain on sale is also
    recognized only when the asset is sold to outsiders. (Example)
    2. The intercompany sale of PPE varies from intercompany sale of merchandise in
    two aspects. First, the intercompany sale of PPE is an unusual transaction
    occurred between affiliated entities while intercompany sale frequently occurs.
    Second, the relatively long useful lives of fixed assets require passage of many
    accounting periods before the gains or losses arising from intercompany sale of
    PPE are realized in sale transactions with outsiders while the intercompany
    profits arising from the intercompany sale of merchandise requires only short
    period of time to realize with outsiders.
    3. Intercompany sales of property, plant, and equipment are also identified as either
    downstream or upstream like the intercompany sales of merchandise.
    4. In a downstream sale of PPE, the gain or loss is adjusted to the controlling
    interest only. Thus, non-controlling interest is not affected.
    5. In an upstream sale of PPE, the adjustments for the gain or loss are allocated
    between the controlling interest and non-controlling interest. Thus, the NCI is
    affected of it.
    6. The accounting procedure of the gain or loss arising from the intercompany sales
    of property, plant, and equipment is deferred until it is sold to the outsiders and
    amortized over the asset’s remaining useful life, if the asset is depreciable, and if
    not, it is not amortized.
    7. If the asset is subsequently sold to an unrelated party or outsiders otherwise
    derecognized, the unamortized balance of the deferred gain or loss is recognized
    immediately in profit or loss.
    8. The unamortized balance of the deferred gain or loss is eliminated when
    consolidated financial statements are prepared.
    9. When previously unrealized intercompany gains are realized, the effects of the
    profit elimination process must be reversed.
    10. In an intercompany sale involving depreciable assets, the amount of depreciation
    recognized each period on an asset purchased from an affiliated is based on the
    intercompany selling price.

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