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Assume subsidiary acquire Plant on 1/1/2010 for $3000 and depreciate it over 5 years straight line basis ,on 1/1/2011 Parent acquire the subsidiary and after the acquisition the parent intern to depreciate the asset over 8 years straight line basis. what will be the effect of this changes in the policy on the calculation of the subs net assets for Good-well purpose
I don’t think it would affect the goodwill calculation. The asset will be valued at fair value by the parent in the calculation of S net assets – presumably at 2,400 – and will be depreciated at the rate of 300 pa.
It is a requirement that the parent company should make sure that all companies within the group adopt uniform accounting policies ( or adjustments shall be made during the consolidation process )
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