When a depreciable non-current asset is sold between entities within a group, any gain recognised on the sale is eliminated and realised through the future use of the asset by the group. This results in reduced depreciation and income tax expenses in future periods.

Question

Quizplus · Accepted Answer

The gain recognised on the sale is eliminated in the consolidation process to avoid overstating the group's profits, but this does not result in reduced depreciation and income tax expenses in future periods. The asset's carrying amount and depreciation are adjusted for consolidation purposes, but this does not directly affect the group's future income tax expenses as these are based on the group's consolidated taxable income.

When a Depreciable Non-Current Asset Is Sold Between Entities Within