Intercompany Fixed Asset Transactions

Question 1

T/F: A gain or loss can be recognized on the intercompany sale/purchase?

Answer 1

False

Question 2

T/F: The asset’s carrying value, depreciation expense, and accumulated deprecation must be adjusted to the original cost from an outside third party.

Answer 2

True

Question 3

CPA Questions on the subject:

Answer 3

What should be on the statements, what is the elimination entry

Question 4

Tools:

Answer 4

• Diagram
• Journal entries
• should be, is, difference table

Question 5

What four accounts need to be adjusted on a fixed asset intercompany transaction?

Answer 5

• Equipment
• Accumulated Depreciation
• Depreciation Expense
• Gain/Loss

Question 6

In the subsequent year of the intercompany transaction, what four accounts need to be eliminated?

Answer 6

• Equipment
• Accumulated Depreciation
• Depreciation Expense
• Retained Earnings (Plug)