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Hi sir I’m unsure of these entries.
On 1 December 2010,T squires S for cash consideration of $541m.The consideration include cash $477 and transfer of non depreciable land with fair value of $64m.Carrying value at acquisition date $56m.At y/E,the asset is still included in the non current asset of T and sales proceeds had been credited
to p/l.
Entries:
Dr Retained earnings $56m
Cr PPE. $56m
I can’t understand why Dr R/E.
Thank you sir.Hi,
The initial entry they have made is to record the proceeds as a credit to profit or loss, so when we remove the non-current asset from the accounts we need to remove this credit from profit or loss too.
Thanks
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