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Unrealised profit

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Unrealised profit

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by MikeLittle.
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  • December 2, 2016 at 8:22 am #353079
    @47@
    Member
    • Topics: 19
    • Replies: 51
    • ☆☆

    When the parent company is transferring an asset to its subsidiary at a profit, we deduct this profit from the consolidated retained earnings and we also deduct the excessive depreciation from the consolidated retained earnings, right??

    December 2, 2016 at 9:11 am #353106
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23327
    • ☆☆☆☆☆

    No, not quite

    We deduct (in the seller’s column of working W3) the gain made on the transfer but we ADD back the excess depreciation, also in the seller’s column

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