acct 1 - the asset acquired is valued effectively in the...

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Why does an intra-entity sale of a depreciable asset (such as equipment or a building) require subsequent adjustments to depreciation expense within the consolidation process? Answer: While doing intra entity transaction, all the depreciable assets needs to be adjusted in the subsequent consolidation processes. They need to be adjusted on the basis of their original cost and the carrying value of the asset. They need to have adjustment depreciation expense, so that
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Unformatted text preview: the asset acquired is valued effectively in the consolidation process in the intra-entity sale. Then these assets are depreciated on the basis of acquisition cost i.e. on the inflated acquisition prices rather than their historical cost. On this basis the depreciation takes place on the basis of their inflated price and the historical prices of cost of the assets. With the consolidation period, these costs are adjusted....
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