NIM 2102015028

NAMA : MUTIA MAULIDA

KELAS : 5I – AKUNTANSI S1
MATA KULIAH : AKUNTANSI KEUANGAN LANJUTAN I

DISCUSSION
“CONSOLIDATION WITH LOSS ON INTERCOMPANY
SALE”

Assume that a machine was sold on January 1, 20x1. Other inform is as follows:

- Selling Price : $20.000

- Remaining useful life : 5 Years
- Ownership : Pop Corporation 90%, Son Corporation 10%
- Pop's book value of machine : $ 30.000
- Unrealized Loss : $10.000

 To record sale of Machinery:

Pop’s book on January 1,
20x1
Cash $20.000
Loss On Sale of Machinery $10.000
Machinery $30.000

 To record purchase of
Machinery: Son’s book on
January 1, 20x1
Machinery $20.000
Cash $20.000
To record depreciation for one year in Son’s
book Depreciation Expense $10.000
Accumulated Depreciation $10.000

If Son’s net income for 20x1 is $200.000 and there are no other intercompany transactions, Pop
records its income from Son as follows:

Investment in Son $188.000

Investment in Son $188.000

To record income for 20x1 determined as follows:

Equity in Son’s income ($200,000 * 90%) $180.000
Add: Unrealized loss on machine $ 10.000
Less: Piecemeal recognition of loss ($10,000, 5 years) ($ 2.000)
$188.000
20x1

a. To eliminate unrealized intercompany loss on downstream

sale: Machinery $10.000
Loss On Sale of Machinery $10.000

b. Accumulated depreciation $2.000

Depreciation expense $2.000

c. Income from Son $188.000

Investment in Son $188.000

d. To record Noncontrolling income for one year

($200.000*10%): Noncontrolling interest share $20.000
Noncontrolling interest $20.000

e. To eliminate reciprocal investment and equity accounts and to establish beginning

noncontrolling interest:
Equity of Son January 1, 20x1 $500.000
Investment in Son $450.000
Noncontrolling interest Jan 1, 20x1 $ 50.000
 20x2
a Machinery (A) $ 10.000
Depreciation expense (E, SE) $ 2.000
Accumulated depreciation (A) $ 4.000
Investment in Son (A) $ 8.000
To eliminate the effects of intercompany sale at a loss

b Accumulated depreciation (A) $ 2.000

Depreciation expense (E, SE) $ 2.000

c Income from Son (R, +SE) $ 178.000

Investment in Son (+A) $ 178.000
To record income for 20x2 determined as follows:
Equity in Son’s income ($200,000 * 90%) $ 180.000
Less: Realize loss on machine $ (10.000)
Add: Unrealized loss on machine $ 10.000
Less: Piecemeal recognition of loss ($10,000, 5 years) $ (2.000)
$ 178.000

d Noncontrolling interest share (SE) $ 20.000

Noncontrolling interest (SE) $ 20.000
To record Noncontrolling income for one year ($200.000*10%)

e Equity of Son January 1, 20x2 (SE) $ 550.000

Investment in Son (A) $ 495.000
$ 762.000Noncontrolling interest Jan 1, 20x2 (SE) $ 55.000
To eliminate reciprocal investment and equity accounts and to establish

20x2: Years sale of Machinery Adjusment and Elimination Consolidated

Pop 90% Son Db Cr Statement
Income statemen
Income From son $ 178.000 c $ 178.000
Depreciation Expense $ 10.000 a $ 2.000 b $ 2.000 $ 10.000
Non controling intrest Share d $ 20.000 $ 20.000
balance sheet Machinery $ 20.000 a $ 10.000 $ 30.000
Accumulated depreciation $ 20.000 a $ 4.000 $ 22.000
b $ 2.000
$ 681.000 c $ 178.000
Investment in son
e $ 495.000
a $ 8.000
Equity of son - Januari 1 e $ 550.000
$ 550.000
Noncontroling intrest d $ 20.000 $ 75.000
e $ 55.000
 20x3
a Machinery (A) $ 10.000
Depreciation expense (E, SE) $ 2.000
Accumulated depreciation (A) $ 6.000
Investment in Son (A) $ 6.000
To eliminate the effects of intercompany sale at a loss

b Accumulated depreciation (A) $ 2.000

Depreciation expense (E, SE) $ 2.000

c Income from Son (R, +SE) $ 178.000

Investment in Son (+A) $ 178.000
To record income for 20x1 determined as follows:
Equity in Son’s income ($200,000 * 90%) $ 180.000
Less: Realize loss on machine $ (10.000)
Add: Unrealized loss on machine $ 10.000
Less: Piecemeal recognition of loss ($10,000, 5 years) $ (2.000)
$ 178.000

d Noncontrolling interest share (SE) $ 20.000

Noncontrolling interest (SE) $ 20.000
To record Noncontrolling income for one year ($200.000*10%)

e Equity of Son January 1, 20x3 (SE) $ 600.000

Investment in Son (A) $ 540.000
$ 812.000Noncontrolling interest Jan 1, 20x3 (SE) $ 60.000
To eliminate reciprocal investment and equity accounts and to establish

20x3: Years sale of Machinery Adjusment and Elimination Consolidated

Pop 90% Son Db Cr Statement
Income statemen
Income From son $ 178.000 c $ 178.000
Depreciation Expense $ 10.000 a $ 2.000 b $ 2.000 $ 10.000
Non controling intrest Share d $ 20.000 $ 20.000
balance sheet Machinery $ 20.000 a $ 10.000 $ 30.000
Accumulated depreciation $ 20.000 a $ 6.000 $ 24.000
b $ 2.000
$ 724.000 c $ 178.000
Investment in son
e $ 540.000
a $ 6.000
Equity of son - Januari 1 e $ 600.000
$ 600.000
Noncontroling interest d $ 20.000 $ 80.000
e $ 60.000
 20x4
a Machinery (A) $ 10.000
Depreciation expense (E, SE) $ 2.000
Accumulated depreciation (A) $ 8.000
Investment in Son (A) $ 4.000
To eliminate the effects of intercompany sale at a loss

b Accumulated depreciation (A) $ 2.000

Depreciation expense (E, SE) $ 2.000

c Income from Son (R, +SE) $ 178.000

Investment in Son (+A) $ 178.000
To record income for 20x1 determined as follows:
Equity in Son’s income ($200,000 * 90%) $ 180.000
Less: Realize loss on machine $ (10.000)
Add: Unrealized loss on machine $ 10.000
Less: Piecemeal recognition of loss ($10,000, 5 years) $ (2.000)
$ 178.000

d Noncontrolling interest share (SE) $ 20.000

Noncontrolling interest (SE) $ 20.000
To record Noncontrolling income for one year ($200.000*10%)

e Equity of Son January 1, 20x4 (SE) $ 650.000

Investment in Son (A) $ 585.000
$ 862.000Noncontrolling interest Jan 1, 20x4 (SE) $ 65.000
To eliminate reciprocal investment and equity accounts and to establish

20x4: Yers sale of Machinery Adjusment and Elimination Consolidated

Pop 90% Son Db Cr Statement
Income statemen
Income From son $ 178.000 c $ 178.000
Depreciation Expense $ 10.000 a $ 2.000 b $ 2.000 $ 10.000
Non controling intrest Share d $ 20.000 $ 20.000
balance sheet Machinery $ 20.000 a $ 10.000 $ 30.000
Accumulated depreciation $ 20.000 a $ 8.000 $ 26.000
b $ 2.000
$ 767.000 c $ 178.000
Investment in son
e $ 585.000
a $ 4.000
Equity of son - Januari 1 e $ 650.000
$ 650.000
Noncontroling interest d $ 20.000 $ 85.000
e $ 65.000
20x5
a Machinery (A) $ 10.000
Depreciation expense (E, SE) $ 2.000
Accumulated depreciation (A) $ 10.000
Investment in Son (A) $ 2.000
To eliminate the effects of intercompany sale at a loss

b Accumulated depreciation (A) $ 2.000

Depreciation expense (E, SE) $ 2.000

c Income from Son (R, +SE) $ 178.000

Investment in Son (+A) $ 178.000
To record income for 20x1 determined as follows:
Equity in Son’s income ($200,000 * 90%) $ 180.000
Less: Realize loss on machine $ (10.000)
Add: Unrealized loss on machine $ 10.000
Less: Piecemeal recognition of loss ($10,000, 5 years) $ (2.000)
$ 178.000

d Noncontrolling interest share (SE) $ 20.000

Noncontrolling interest (SE) $ 20.000
To record Noncontrolling income for one year ($200.000*10%)

e Equity of Son January 1, 20x5 (SE) $ 700.000

Investment in Son (A) $ 630.000
Noncontrolling interest Jan 1, 20x5 (SE) $ 70.000 $ 912.000
To eliminate reciprocal investment and equity accounts and to establish beginning

20x5: Years sale of Machinery Adjusment and Elimination Consolidated

Pop 90% Son Db Cr Statement
Income statemen
Income From son $ 178.000 b $ 178.000
Depreciation Expense $ 10.000 a $ 2.000 b $ 2.000 $ 8.000
Non controling intrest Share c $ 20.000 $ 20.000
balance sheet Machinery $ 20.000 a $ 10.000 $ 30.000
Accumulated depreciation $ 20.000 a $ 10.000 $ 28.000
$ 2.000
Investment in son $ 810.000 c $ 178.000
e $ 630.000
a $ 2.000
Equity of son - Januari 1 d $ 700.000
$ 700.000
Noncontroling interest d $ 20.000 $ 90.000
e $ 70.000

the following investment and equity balances—and changes in them—as additional assumptions:
Investment in 90% of the 100% of the
Son 90% Equity of Son Equity of Son
December 31, 20x0 $ 450.000 $ 450.000 $ 500.000
Income 20x1 $ 188.000 $ 45.000 $ 50.000
December 31, 20x1 $ 638.000 $ 495.000 $ 550.000
Income 20x2 $ 178.000 $ 45.000 $ 50.000
December 31, 20x2 $ 816.000 $ 540.000 $ 600.000
Income 20x3 $ 178.000 $ 45.000 $ 50.000
December 31, 20x3 $ 994.000 $ 585.000 $ 650.000
Income 20x4 $ 178.000 $ 45.000 $ 50.000
December 31, 20x4 $ 1.172.000 $ 630.000 $ 700.000
Income 20x5 $ 178.000 $ 45.000 $ 50.000
$ 1.350.000 $ 675.000 $ 750.000