Compare the effect on Balance Sheet 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 Balance Sheet
|
| J
|
Unbilled Revenue (from Revenue Generation)
|
105.00 debit
|
| L
|
Intercompany Accounts Payable (from Intercompany Billing)
|
103.00 credit
|
|
|
Change in Equity
|
2.00
|
| Expense Company’s Balance Sheet
|
| L
|
Intercompany Accounts Receivable (from Intercompany Billing)
|
103.00 debit
|
| K
|
Trade Payable (from Accounts Payable posting)
|
100.00 credit
|
|
|
Change in Equity
|
3.00
|
Approach 2: Emphasis on Projects
| Expense Company’s Balance Sheet
|
| O
|
Intercompany Accounts Receivable (from Intercompany Billing)
|
103.00 debit
|
| N
|
Trade Payable (from Accounts Payable posting)
|
100.00 credit
|
|
|
Change in Equity
|
2.00
|