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Describe the treatment of intercompany sale of a non-depreciable asset and the sale of a depreciable...

Describe the treatment of intercompany sale of a non-depreciable asset and the sale of a depreciable asset.

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Answer #1

1) Intercompany sale of a non-depreciable asset e.g. sale of goods

Entry TI

Sales Debit

Cost of goods sold Credit

Entry G

Cost of Goods sold Debit

Inventory Credit

2) Journal entry for intercompany sale of a depreciable asset.:

Journal entry in parent company

Debit the subsidiary loan account

credit each of the assets with the balancing value of each account.

Journal entry in subsidiary company

Debit each of the assets with the balancing value of account.

Credit the parent company loan account

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