Question

A non-current asset was sold by Subsidiary Limited to Parent Limited on 30 June 2014. The carrying amount of the asset at the time of sale was $700,000. As part of the consolidation process, the following journal entry was passed.

30 June 2014

Dr Profit on sale of asset

200 000

Dr Asset

300 000

Cr Accumulated Depreciation

500 000

Required: assuming there is another ten years of useful life remaining for the asset, what are the journal entries at 30 June 2016 to adjust for depreciation? (5marks) (Show all working)

30 June 2014

 

 

Dr Profit on sale of asset

200 000

 

Dr Asset

300 000

 

Cr Accumulated Depreciation

 

500 000