Compare the effect on Income Statement labor 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
|
|
Employee's Home Company’s Income Statement
|
| B
|
Intercompany Revenue Transfer In (from Intercompany Billing)
|
900.00 credit
|
| D
|
Intercompany Direct Labor Transfer In (from Intercompany Billing)
|
300.00 debit
|
| E
|
Actual Overhead Costs (employee's company)
|
538.00 debit
|
|
|
Profit
|
62.00
|
Approach 2: Emphasis on
Projects
|
Project Company’s Income Statement
|
| F
|
Project Revenue (from Revenue Generation)
|
900.00 credit
|
| G
|
Direct Labor (from Timesheet Posting)
|
300.00 debit
|
| H
|
Intercompany Overhead Transfer In (from Intercompany Billing)
|
540.00 debit
|
|
|
Profit
|
60.00
|
|
Employee's Home Company’s Income Statement
|
| H
|
Intercompany Overhead Transfer Out (from Intercompany Billing)
|
540.00 credit
|
| I
|
Actual Overhead Costs (employee's company)
|
538.00 debit
|
|
|
Profit
|
2.00
|
