There is a saying in the textbook that when it comes to counter-current transactions, an additional offset entry should be added, that is, the unrealized gains and losses in internal transactions should be offset and borne by the parent company and minority shareholders. Therefore, the following entries were added:

Borrow: minority shareholders' rights and interests

Loans: profit and loss of minority shareholders

It's this entry that has been bothering me for almost an afternoon!

Baidu, online school forum, Zhihu, reading papers and documents, finally got it, and also got the details.

The reason is that according to the offset entry in the first step of the textbook, that is, the long-term investment offsets the owner's equity of the subsidiary, the value calculated by the long-term investment equity method does not consider internal transactions! It's rough! There is a loophole! Why didn't you say it earlier, why didn't you confess it, and why did you let me guess for a long time! )

Similarly, in the second step, the investment income is offset by the undistributed profits of subsidiaries at the end of the period and the profits distributed to shareholders, and the investment income does not consider internal transactions! It's rough! There is a loophole!

As a result, the undistributed profit of the parent company at the end of the period in the balance sheet in the consolidated statement is not allowed, the inventory value in the asset item is not allowed, and the rights and interests of minority shareholders are not allowed. (Equity, capital reserve and surplus reserve are allowed, because they offset the data of subsidiaries and reflect the equity, capital reserve and surplus reserve of the parent company itself. )

It also leads to inaccurate operating income, inaccurate operating cost, inaccurate net profit and inaccurate profit and loss of minority shareholders in the consolidated income statement.

Therefore, it is necessary to correct the inaccuracies in the first and second steps.

So the third step has an offset entry:

Debit: operating income

Credit: Operating costs

goods in stock

If this entry goes on, the inventory in the consolidated balance sheet will be accurate;

If you enter it in this way, the operating income, operating cost and net profit (equal to the adjustment of operating income-the adjustment of operating cost) will also be accurate;

So what is not allowed?

Minority shareholders' equity, minority shareholders' profits and losses and undistributed profits in the owner's equity of the parent company's balance sheet.

Therefore, there are offset entries in the fourth step:

Borrow: profit and loss of minority shareholders

Loan: minority shareholders' rights and interests

In this way, the rights and interests of minority shareholders will be approved, and the profits and losses of minority shareholders will be approved;

If this entry goes on, the undistributed profit of the parent company will be accurate.

How to understand the relationship between minority shareholders' rights and interests and their profits and losses?

1 Tell me about people. First of all, the profit and loss of minority shareholders are generated by consolidated statements, which can be considered as the offset of profits (in essence, the division of profits between majority shareholders and minority shareholders). This treatment has a theoretical premise. This view is not only applicable to all consolidated entries, but also difficult to understand if it is not clear. In the parent company theory, the group only treats the shareholders of the parent company as shareholders to discriminate against minority shareholders. It is believed that minority shareholders' rights and interests are liabilities of the group, not rights and interests at all, and the profits attributed to minority shareholders are not profits but expenses of the group (if you don't understand, just think about the two entries of profit distribution and long-term investment offset, which is a typical example of this thought). To put it bluntly, minority shareholders are outsiders, and our group should draw a line with this boy.

2 The profit and loss arising from counter-current trading is assumed to be earned here, and the Group should fully offset the income cost and inflated asset cost. The group thinks that there are still a few shareholders in the subsidiary as outsiders, so I can't bear all the profits to be offset by me, and I'm not wholly owned. Your minority shareholders also have to bear your share, so there are profits and losses for minority shareholders. In essence, this accounting entry recovered the part of the profits that were completely offset by the minority shareholders. Accurately speaking, the redistribution of profit and loss is reclassification. Profit is the profit from the perspective of the parent company, and the credit of the profit and loss account is equivalent to increasing the profit of the group. Accordingly, by taking advantage of minority shareholders' rights and interests, the corresponding item is that the profits borne by your minority shareholders reduce your minority shareholders' rights and interests. In other words, the group believes that it has reduced its liabilities.

In addition, the accounting entity of the consolidated statement is the group, which is the position of the group. Minority shareholders don't think so. Whether your group is left-handed or right-handed is none of my business. If my equity investment meets the standard of long-term investment, I should leave my account. I have no related party relationship with your group. My statement is my decision.

Why should the profit and loss of minority shareholders be adjusted by the accounting institute? The probability of encountering problems is generally high. Learning is all about getting in touch with some unfamiliar knowledge, and familiar knowledge doesn't need to be so laborious. There are two ways to solve a problem, one is to find information by yourself, from teaching materials to teaching AIDS, and the other is to find the answer, that is, to consult directly.