Question
Can you help me to solve this question which related to Financial Accounting Subs Ltd owns a machine that cost $200,000, which was to be
Can you help me to solve this question which related to Financial Accounting
Subs Ltd owns a machine that cost $200,000, which was to be depreciated over 10 years on a straight-line basis (zero residual value). What would the carrying amount be after three years?
Assume Parent Ltd acquired all of the shares in Subs Ltd at this time. As part of the acquisition analysis, the fair value of the machine was estimated to be $154,000.
By adjusting for more depreciation expense per year in the consolidation entries, tax expense will reduce by how much per year?
The DTL created by the revaluation adjustment at consolidation was $4,200.
The DTL will reverse away over the remaining useful life of the asset, which is how many years?
Remember that no consolidation entries are recorded in the accounting records of the parent or subsidiary, so they must be repeated year after year. However, only entries relating to the current year's incomes and expenses can be adjusted to those specific accounts. Anything prior to the current year must be adjusted to Retained Earnings, since each year the P/L Summary account is closed to Retained Earnings.
Assume it is now four years after the parent acquired the subsidiary, so entries to account for four years' worth of depreciation and tax adjustments are required. Based on the information above, complete the following journal entries: Dr Depreciation Expense, Dr Retained Earnings, Cr Accumulated Depreciation, Dr Deferred Tax Liability, Cr Income Tax Expense, Cr Retained Earnings
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