Question

Public Berhad transferred a machine to 75% owned subsidiary Queen Berhad on 1 May 2018 for...

Public Berhad transferred a machine to 75% owned subsidiary Queen Berhad on 1 May 2018 for RM500,000. The carrying amount of the machine on 1 May 2018 was RM400,000, and on this date the asset was estimated to have four years of useful life left.

Prepare the journal entries in respect of thetransfer

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Answer #1

in the books of public berhad on 1 may 2018

investment in queen berhad dr. RM 500,000

to machine account RM400,000

to profit on transfer. RM100,000

(entry on account of transfer of machinery)

income from queen berhad dr. RM 75000

to investment in queen berhad RM 75000

(on account of realizing 75% profit of RM 100,000)

notes 1

sale price RM 500,000

less: carrying value RM 400,000

profit on sale RM 100,000

NOTE 2]

income from subsidiary RM 100,000

% of ownership 75%

income share 100,000 * 75% = RM 75,000

note 3

since book value of the machine is not given, accumulated depreciation can not be found

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