Asked by Mitch Carpenter on Jul 16, 2024
Verified
Which of the following statements is incorrect?
A) Adjustments are required for both prior period and current period intragroup transactions to the extent that the effects of those transactions are still present in the individual accounts of the entities involved.
B) The profits or losses generated from intragroup transfers of assets are considered realised from the group's perspective until such movement when those assets are transferred to external entities.
C) Adjustments are determined by comparing the amounts recognised in the individual accounts affected with the amounts that the group should recognise.
D) When adjustments for intragroup transactions affect the carrying amount of assets or liabilities, further adjustments are made for the tax effect of those adjustments.
Intragroup Transfers
Transactions of goods, services, or financial assets between divisions or entities within the same group or company.
Retained Earnings
The portion of net income that is retained by a company rather than distributed to its shareholders as dividends.
Current Period
Refers to the specific duration of time for which financial activities are reported and analyzed, usually a fiscal quarter or year.
- Fathom and put into practice the theory of unrealized gains and losses in intracompany dealings, with an understanding of the need to expunge these from consolidated financial statements.
- Recognize the implications of intragroup asset transfers, including plant and equipment, on consolidated financial statements.
Verified Answer
Learning Objectives
- Fathom and put into practice the theory of unrealized gains and losses in intracompany dealings, with an understanding of the need to expunge these from consolidated financial statements.
- Recognize the implications of intragroup asset transfers, including plant and equipment, on consolidated financial statements.
Related questions
During the Current Period, Ambrose Limited Sold Inventories to Its ...
The Realisation of the Profit or Loss on a Depreciable ...
Unrealised Profits on the Intragroup Sale of Inventory Will Only ...
Explain Why Some Consolidation Adjusting Entries Are Required to Be ...
An Impairment Loss Will Be Recognised in the Group Accounts ...