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Prodigal Co Bpp Consolidation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Prodigal Co Bpp Consolidation

  • This topic has 1 reply, 2 voices, and was last updated 1 week ago by P2-D2.
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  • November 25, 2021 at 8:16 pm #641628
    kinza1997
    • Topics: 16
    • Replies: 16
    • ☆

    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

    November 27, 2021 at 7:55 am #641752
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 5752
    • ☆☆☆☆☆

    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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