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Question: Paladin
The fair value of the plant of the subsidiary was over its carrying value at the date of acquisition by $4 million.
Why isn’t any part of this $4 million depreciated, instead, the consolidated amount of assets include the whole $4 million!Question: Keystone
Revaluation occurred to the leasehold property at the beginning of the year. And the revaluation amount is reported net of tax without realising any part of it in the statement of P/L.
– Revaluation amount is
Hi,
1st question:
the Fair value increase of 4,000 is consolidated IN FULL at date of aquisition because at that date, there hasn’t been any depreciation for the year based on the new value.The excess depreciation during the year will be adjusted in P/L (which is adjusted in Subsidiary Retained earnings)
2nd question:
Revaluation and deffered tax created from that is recognize in “Other comprihensive income”. OCI is a separate part from P/L, that is why none of it is reported in P/L.P/L items will goes to Retained earnings, but OCI items do not (unless company choose to transfer excess depreciaition on revaluation reserve to Retained earnings).
Hope this help
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