Compare the effect on Income Statement expense results if you use an
employee-centered approach to Intercompany Billing versus a
project-centered approach.
Approach 1: Emphasis on
Employees
|
Project Company’s Income Statement
|
| A
|
Project Revenue (from Revenue Generation)
|
900.00 credit
|
| B
|
Intercompany Revenue Transfer Out (from Intercompany Billing)
|
900.00 debit
|
| C
|
Direct Labor (from Timesheet Posting)
|
300.00 debit
|
| D
|
Intercompany Direct Labor Transfer Out (from Intercompany Billing)
|
300.00 credit
|
|
|
Profit
|
0.00
|
|
Project Company’s Income Statement
|
| J
|
Project Revenue (from Revenue Generation)
|
105.00 credit
|
| K
|
Travel Expense (from AP Posting)
|
100.00 debit
|
| L
|
Intercompany Expense Markup (from Intercompany Billing)
|
3.00 debit
|
|
|
Profit
|
2.00
|
| Expense Company’s Income Statement
|
| L
|
Intercompany Expense Markup Revenue (from Intercompany Billing)
|
3.00 debit
|
|
|
Profit
|
3.00
|
Approach 2: Emphasis on
Projects
|
Project Company’s Income Statement
|
| A
|
Project Revenue (from Revenue Generation)
|
900.00 credit
|
| B
|
Intercompany Revenue Transfer Out (from Intercompany Billing)
|
900.00 debit
|
| C
|
Direct Labor (from Timesheet Posting)
|
300.00 debit
|
| D
|
Intercompany Direct Labor Transfer Out (from Intercompany Billing)
|
300.00 credit
|
|
|
Profit
|
0.00
|
|
Project Company’s Income Statement
|
| M
|
Project Revenue (from Revenue Generation)
|
105.00 credit
|
| N
|
Travel Expense (from AP Posting)
|
100.00 debit
|
| O
|
Intercompany Expense Revenue Transfer Out (from Intercompany Billing)
|
103.00 debit
|
| P
|
Intercompany Expense Transfer Out (from Intercompany Billing)
|
100.00 debit
|
|
|
Profit
|
2.00
|
| Expense Company’s Income Statement
|
| Q
|
Intercompany Expense Revenue Transfer In (from Intercompany Billing)
|
103.00 credit
|
| P
|
Intercompany Expense Transfer In (from Intercompany Billing)
|
100.00 debit
|
|
|
Profit
|
3.00
|
