A Parent Entity Group Sold a Depreciable Non-Current Asset to a Subsidiary

question 36

Multiple Choice

A parent entity group sold a depreciable non-current asset to a subsidiary entity for $5 300. The asset originally cost $7 000 when acquired from an external party and at the date of the intragroup sale the accumulated depreciation was $2 200. The amount of the unrealised gain on the intragroup sale to be eliminated is:

• A) $500.
• B) $2 200.
• C) $4 800.
• D) $5 300.

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Definitions:

Non-posting Account

A non-posting account is an account used in accounting software for transactions that affect reports or balances without affecting the general ledger.

Accounting System

A systematic process of recording, measuring, and communicating financial information about economic entities.

Chart of Accounts

A systematic listing of all ledger account titles and numbers used in a company's accounting system.

Income Account

An account used in accounting to track revenue or income generated by a business or individual over a period of time.