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

question 23

Multiple Choice

A non-current asset was sold by Subsidiary Limited to Parent Limited 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 Limited pay Subsidiary Limited for the asset; (b) was the cost of the asset as shown in the books of Subsidiary Limited?

• 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