What Are Intercompany Transactions?

Internal transactions. Internal transactions refer to various transactions and transactions other than equity investments that occur between the parent company of the group company and its subsidiaries and between the subsidiaries. ^[1]

Insider trading

Right!

Issues that should be paid attention to in internal transaction accounting:

In national accounts,

Elimination of intra-group transactions:

I. Internal purchase and sales offset processing of parent and subsidiary companies

1.Buyers of internal transactions realized external sales in the current period

[Example 1] Assume that the parent company sells a batch of products to the subsidiary and collects 700,000 yuan. The production cost of the batch of products is 500,000 yuan. The subsidiary sold the entire batch of products to the third-party company G outside the group and received 1 million yuan.

Analysis: First of all, sort out the business processing when the parent company and the subsidiary have internal transactions before the merger. As taxes cannot be offset, taxes are not considered in the preparation of consolidated statements.

(1) Parent company

Borrow: bank deposit 700000

Loan: main business income 700,000

Borrow: Main business cost 500,000

Loan: Stock 50000

(2) Subsidiaries

Borrow: Inventory 700000

Loan: bank deposit 700000

Borrow: bank deposit 1000000

Loan: Main business income 1000000

Borrow: main business cost 700,000

Credit: Inventory 700,000

Secondly, the analysis of the second entry business of the parent company and subsidiary is an external transaction and cannot be offset. Therefore, after the merger, internal sales revenue and internal sales costs can only be offset. The offset entry is:

Borrow: Main business income 700,000

Loan: main business cost 700,000

2. All purchasers of internal transactions have not realized external sales in the current period.

[Example 2] According to Example 1, the business process of the internal transaction between the parent company and the subsidiary before the merger is as follows:

(1) Parent company

Borrow: bank deposit 700000

Loan: main business income 700,000

Borrow: Main business cost 500,000

Loan: Stock 50000

(2) Subsidiaries

Borrow: Inventory 700000

Loan: bank deposit 700000

At this time, from the perspective of the entire group, in fact, only the storage location of the goods has changed, and sales outside the enterprise group have not really been realized. Therefore, the internal sales revenue and internal cost of sales that have been recognized by the sales company should be offset during the merger. At the same time, the value of the inventories in the individual balance sheets of the buying companies, including the gross sales profits realized by the selling companies, that is, unrealized internal sales profits, should be offset. The offsetting entry is:

Borrow: Main business income 700,000

Loan: Main business cost 500,000

200000 in stock

3. The purchaser of internal transactions partially realized external sales in the current period and partially unsold sales at the end of the period.

There are three types of analysis ideas:

(1) For the realized sales part, the first case is dealt with, and the unfulfilled sales part is dealt with the second case.

(2) Handle according to the second case mentioned above. That is, first find out the unrealized internal sales profit, and then find the current sales revenue, and the difference is the cost of sales. The offsetting entries are summarized as: debit "main business income" (internal sales income, current income), credit "inventory" (no internal sales profit at the end of the period), "main business costs" (the difference between the two) Is the cost of sales).

(3) First assume that all external sales are realized, and then the internal sales profits of unrealized sales are treated separately. You can only use this idea when conducting continuous offsets and when your business is too complex.

Borrow: Main business income 700,000

Loan: main business cost 700,000

Borrow: Main business cost 200000

Credit: Inventory 200000

Offset of unrealized internal sales profits contained in fixed assets

1. Offset for the current period of fixed asset purchase

Debit "main business income" (internal sales income), credit "main business costs" (cost of sales), "fixed asset original price" (unrealized internal sales profits). Offset the current depreciation of fixed assets, debit "accumulated depreciation" and credit "administrative expenses". Note that for fixed assets used in the production sector, depreciation is included in manufacturing costs, so inventory should be credited when offsetting.

2. Consecutive offsets for subsequent periods:

(1) To offset unrealized internal sales profits and adjust the undistributed profits at the beginning of the period, debit "undistributed profits at the beginning of the period" and credit "original fixed asset prices".

(2) To offset the accumulated depreciation at the beginning of the period and adjust the undistributed profits at the beginning of the period, debit the "accumulated depreciation" and credit the "undistributed profits at the beginning of the period".

(3) Depreciation of multiple accruals in the current period is offset, debited for "accumulated depreciation" and credited for "management expenses".

[Example 3] On December 31, 2000, the subsidiary purchased a stock from the parent company at a cost of 300,000 yuan and a selling price of 500,000 yuan as fixed assets. The service life is 4 years. Depreciation method.

(1) When purchased in 2000

Borrow: 500,000 main business income

Loan: Main business cost 300000

Original price of fixed assets 200000

(2) In 2001

Offset the unrealized internal sales profit and adjust the opening undistributed profit

Borrow: Undistributed profit at the beginning of 200000

Loan: Original price of fixed assets 200000

Offset the depreciation over the year (200,000 yuan ÷ 4 = 50,000 yuan)

Borrow: Accumulated Depreciation 50000

Loan: Administrative expenses 50000

(3) In 2002

Offset processing is the same as in 2001

Cancel the accumulated depreciation at the beginning of the period and adjust the undistributed profit at the beginning of the period

Borrow: Accumulated Depreciation 50000

Loan: Undistributed profit at the beginning of the period 50000

Since the depreciation expenses of the previous year have been transferred to profit, the accumulated undistributed profit is the beginning undistributed profit. Therefore, the item opening undistributed profit is used for offsetting.

(4) 2003

Offset processing is the same as in 2001

Cancel the accumulated depreciation at the beginning of the period and adjust the undistributed profit at the beginning of the period

Borrow: Accumulated depreciation of 100,000

Loan: Undistributed profit at the beginning of 100,000

(5) Normal scrap of fixed assets in 2004

Borrow: 50,000 undistributed profits at the beginning of the period

Loan: Administrative expenses 50000