Chapter 8 KB - Chapter 8 (A) Intercompany Profits in...

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Chapter 8 1 Chapter 8 (A) Intercompany Profits in Depreciable Assets (part B is not covered in the course)
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Chapter 8 2 Learning Objectives How to handle the elimination and subsequent realization of unrealized profits (and the associated depreciation) in intercompany sales of depreciable assets. Intercompany bondholdings (part B) are outside of the scope of this course
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Chapter 8 3 Intercompany Profits in Depreciable Assets
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Chapter 8 4 Intercompany Profits in Depreciable Assets Depreciable assets sold intercompany introduce complexities not seen with intercompany transfers of land and other non-depreciable assets: The incremental depreciation (the amount not based on historical cost to the group) must be eliminated (Because the purchasing company will base its depreciation calculation on its purchase price which is not the purchase price for the combined entity.)
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Chapter 8 5 Intercompany Profits in Depreciable Assets Summary of adjustments: Step 1:
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Chapter 8 KB - Chapter 8 (A) Intercompany Profits in...

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