Help! accounting!?

Question

What are the accounting treatments, adjustments for inter company trading, and what is the nature of it?

Answer 1

When you have intercompany sales or purchases, your a/cg entries are the same as for other customers/vendors, except you keep them in a separate a/c. In the income statement, you'll have a line for intercompany sales or purchases. In the balance sheet, you'll have a line for amounts due from/to related parties (and whether trade or non-trade). This is to facilitate consolidation eliminating entries later.

When consolidating, intragroup balances and transactions, including income, expenses and dividends, are eliminated in full. Profits and losses resulting from intragroup transactions that are recognised in assets, such as inventory and fixed assets, are eliminated in full. Intragroup losses may indicate an impairment that requires recognition in the consolidated financial statements. IAS 12 Income Taxes applies to temporary differences that arise from the elimination of profits and losses resulting from intragroup transactions.

Answer 2

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