I'm confused with how to deal with "TNCA transfer and Depreciation"
1)Refer to OT notes,adjustment for profit for unrealized profit should be made in the records of entity which has recognised the profit ie selling entity.
the adjustment for depreciation should be made in the records of entity holding the asset.
2)when doing the Dec2007 Q1, "Plateau sold an item to Savannah at its agreed fair value of 2.5m.its carrying amount prior to the sale was 2m. the estimated remaining life of the plant at the date of sale was 5 years(straight line basis).", the answer shows that in the working of consolidated retained earnings, 400,000 was deducted from Parents company's retained earnings.
However, If I apply the method mentioned in the OT notes, it should be 500,000 deduct from P's retained earnings, and 100,000 add to S's retained earnings.
Hope I expressed it clearly. Thank you for your replies.
1)Refer to OT notes,adjustment for profit for unrealized profit should be made in the records of entity which has recognised the profit ie selling entity.
the adjustment for depreciation should be made in the records of entity holding the asset.
2)when doing the Dec2007 Q1, "Plateau sold an item to Savannah at its agreed fair value of 2.5m.its carrying amount prior to the sale was 2m. the estimated remaining life of the plant at the date of sale was 5 years(straight line basis).", the answer shows that in the working of consolidated retained earnings, 400,000 was deducted from Parents company's retained earnings.
However, If I apply the method mentioned in the OT notes, it should be 500,000 deduct from P's retained earnings, and 100,000 add to S's retained earnings.
Hope I expressed it clearly. Thank you for your replies.
