There is fair value adjustmen of PPE in the amount of 1,2 m $ (less than the carrying amount). Why is there no effect of this FVA in the Statement of comprehensive income? (ie wouldn't it be correct to increase cost of sales by 1,2 m $)
Premier, December 2010
14y ago#1no, the adjustment is to debit Income Statement ( Comprehensive Income ) and credit the asset.
The Income Statement is also affected each subsequent year because the depreciation charge ( for consolidation purposes ) will be based on the reduced fair value
The Income Statement is also affected each subsequent year because the depreciation charge ( for consolidation purposes ) will be based on the reduced fair value