Where an Intragroup Sale of an Asset Has Been Made

question 13

True/False

Where an intragroup sale of an asset has been made and the asset was classified as inventory in the selling entity's books,but subsequently classified as plant in the buying entity's books,all depreciation recognised in the buying entity's books must be eliminated on consolidation.

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Definitions:

Circular-Flow Diagram

A visual model of the economy that shows the flow of money, goods and services, and factors of production between households and businesses.

Firms

Businesses or companies that produce goods or provide services with the aim of making a profit.

Resources

Assets and inputs used to produce goods and services, such as time, labor, capital, and natural resources.

Factor Market

The marketplace for services of the factors of production (labor, land, capital) where these are bought and sold.