[Kim]

Let me draft it in a more clear situation.

Company A have two operations namely food and beverage (Segment X) and clothing division (Segment Y).

Then, Company A decided to dispose of Segment X and form a Company B to take care of Segment X. So, Company A will have Segment Y and Company B will have Segment X.

In March 2014, valuation was carried out to determine the value of Segment X and it was determined to be 5 million. Although actual transferred date is July 2014, Company A decided to have March 2014 value to be the consideration received from Company B.

However, during the period (from March14 to July14), there are additions of asset for Segment X. Therefore, the transferred to Company B would be 5 million (Mar14) and 5 million (July14).

The sales consideration remained at 5 million.

So, Company B will
DR Asset 10 million
CR Bank 5 million

Question is how should we accounted for the difference of 5 million. Should we credited to revaluation reserve account because the difference was due to additions of asset, not revaluation.

[Author]

Posts