Asked by Sneha Philip on Jun 23, 2024
Verified
The realisation of the profit or loss on a depreciable asset transferred within the group:
A) occurs only when the asset is sold to an external party.
B) results in an inconsistent pattern with the allocation of depreciation of the asset.
C) is assumed to occur only when an external entity becomes directly involved with the asset.
D) is assumed to occur when the future benefits embodied in the asset are consumed by the group.
Depreciable Asset
An asset that loses value over time due to wear and tear or obsolescence, which can be depreciated over its useful life.
Realisation of Profit
The process by which a profit is recognized on the books once a transaction is completed and the revenue can be reliably measured.
External Party
An individual, group, or organization outside of a company that can affect or be affected by the business's activities.
- Comprehend and utilize the notion of unrealized gains and losses in intragroup dealings and the necessity for their eradication in consolidated financial statements.
- Identify the effects of asset transfers within a group, such as plant and equipment, on the consolidated financial statements.
Verified Answer
Learning Objectives
- Comprehend and utilize the notion of unrealized gains and losses in intragroup dealings and the necessity for their eradication in consolidated financial statements.
- Identify the effects of asset transfers within a group, such as plant and equipment, on the consolidated financial statements.
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