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As the group must make these fair value adjustments at acquisition, there is also an additional depreciation adjustment to be made to depreciable assets. At accaglobal.com, it guides that the current year’s depreciation expense on the fair value adjustment must be included in the consolidated statement of profit or loss. However, if subsidiary use the asset to produce finished goods, how to treat additional depreciation from Fair value adjustment ?
Should the additional depreciation be transferred into cost of Inventory in the consolidated statement of financial position OR be expense in the consolidated statement of profit or loss as guidance from accaglobal?
In the FR exam the additional depreciation is only going to appear within the cost of sales line within the group SFP.