Inter-company Transfers Depreciable Assets Summer I 2009

Inter-company Transfers Depreciable Assets Summer I 2009 -...

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Accounting 401 Intercompany Depreciable Plant Asset Transfers A. When depreciable assets are transferred from one affiliate to another, consolidated working paper entries are required to eliminate (defer) unrealized inter-company profit or loss on the sale, adjust the transferred assets to their historical cost to the consolidated entity, and eliminate inter-company receivables or payables that may result from the transactions. B. Following the transfer of the assets, it is necessary to adjust for excess or insufficient depreciation that has been recorded by the purchasing affiliate. In other words, the purchasing affiliate records depreciation based on their cost. A different depreciation would result if it was based on original acquisition cost. In essence, this adjustment represents a partial realization of the previously unrealized inter-company gain or loss on the transfer. An elimination entry also is necessary to restate the balances in the asset and accumulated depreciation accounts so they are based on the original acquisition cost rather than the transfer price. C.
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This note was uploaded on 03/08/2012 for the course ACCT 401 taught by Professor Staff during the Summer '08 term at Texas A&M.

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Inter-company Transfers Depreciable Assets Summer I 2009 -...

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