Hi…
I need help…
Immediately after acquisition of S co on 1 Oct 20×0, P co transferred an item of plant with carrying amount of $4 million to S co at an agreed value of $5 million.
at this date, the plant had a remaining life of two and a half years. P Co had included the profit on this transfer as a reduction in its depreciation cost. all depreciation is charged through cos.
i have difficulty understand the full adj
i know that profit on transfer is $1000
excess depn is $200
i cannot understand why $800 is being added to cos? i am getting only $200.
also, in NCI , why is it adding $200.. i thought it should be deducted
what would be the double entry in both sopl and sofp and adj to NCI?
plz help
Ask the Tutor ACCA FR
Prodigal Co Bpp Consolidation
Hi,
The $800 is the net adjustment from eliminating the profit on transfer of $1000 and then removing the excess depreciation that is being charged on the increased value of the asset.
The $200 is being added as it is increasing the post-acquisition profits of the subsidiary given that we are removing the additional depreciation.
Thanks
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