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Hi Mike!
I have some issue relating to a question on consolidation.
The Total NCA of both the parent and subsidiary are $144,000 on 31 AUG 20X6. In the question, it says that if S had revalued its NCA on 1 SEP 20X5, an additional of $3,000 would have been made to the depreciation charged for for 20X5/X6.
-When preparing the consolidation for the year 31 AUG 20X6, the calculation of the NCA is $144000-$3000.
-Why this $3000 has been subtracted? What’s the logic?
Thanks.
The calculation should have been:
$144,000 + the amount of the revaluation – the extra depreciation on that revalued S asset
Are you sure that you have used the precise words from the question?
For example, does it say that “the fair value of the total assets was $144,000”? or simply “The Total NCA of both the parent and subsidiary are $144,000”
That’s important so you really need to be VERY careful!
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