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Sir,
Please guide me regarding treatment of sale of non current asset in a group. My teacher taught me as:
(i) deduct URP from:
– seller’s profit
– asset
(ii) Add excess depreciation to:
– buyer’s profit
– asset
but in ACCA books it is written that URP is adjusted net of excess depreciation from seller’s profit. please advise.Ali
Your teacher and I agree! It makes no conceptual sense whatsoever to adjust the NET figure. The seller has recognised the ( unrealised ) profit and the buyer has (over) charged depreciation ( so far as the group is concerned )
I agree with your teacher.
Incidentally, you’ll find that BPP are not 100% consistent with their method!
Good luck on Wednesday
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