A Non-Current Asset Was Sold by Subsidiary Plc to Parent

question 9

Multiple Choice

A non-current asset was sold by Subsidiary Plc to Parent Plc during the 2013/14 financial year.The carrying amount of the asset at the time of the sale was £1 400 000.As part of the consolidation process,the following journal entry was passed. $$\begin{array} { | l | r | l | } \hline 30 \text { June } 2014 & & \\\hline \text { Dr Profit on sale of asset } & 400000 & \\\hline \text { Dr Asset } & 600000 & \\\hline \text { Cr Accumulated depreciation } & & 1000000 \\\hline\end{array}$$ What (a) amount did Parent Plc pay Subsidiary Plc for the asset; (b) was the cost of the asset as shown in the books of Subsidiary Plc?

• A)(a) £1 800 000; (b) £1 400 000
• B)(a) £1 800 000; (b) £1 600 000
• C)(a) £1 400 000; (b) £2 400 000
• D)(a) £1 800 000; (b) £2 400 000

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Definitions:

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