Week 4

Case C6-1

a. The rule 1 addresses a section of elimination required, it states in textbook “when there have been intercompany stock dealings, eliminating entries should remove the income as well as expenditures linked to the intercompany transfers documented by the individual organizations.” Therefore, “the eliminations make sure only the cost of the stock to the combined organization is included in the consolidated balance sheet when the stock is still on hand and it billed to expense of goods sold in the time the stock is resold to nonaffiliated.

Case C8-5 Question (a) only

a. What major problem might arise with intercompany debt between a domestic parent and a foreign subsidiary or between subsidiaries in different countries? How has Hershey Foods dealt with this problem?