Asked by Furqaan Sayed on Jun 05, 2024
Verified
Explain why some consolidation adjusting entries are required to be carried forward to future years.
Adjusting Entries
Journal entries made at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred.
Future Years
Subsequent time periods extending beyond the current year, regarding planning, forecasting, or expectation.
- Comprehend the fundamentals and methodologies involved in amalgamating financial statements for transactions between affiliated companies.
- Recognize and elucidate the effect of transactions within a group on consolidated financial reports.
Verified Answer
MC
Marcella ConsiglioJun 06, 2024
Final Answer :
Carry forward of consolidation adjusting entries:
- Worksheet adjusting entries do not carry forward automatically because the worksheet is outside the records of any group company and must be prepared each year.
- An item of property,plant and equipment typically provides economic benefits over a number of accounting periods subsequent to its sale on an intragroup basis.Worksheet entries will be required over the life of the asset to adjust the effect of unrealised profits included in the carrying amount of the asset.
- Worksheet adjusting entries do not carry forward automatically because the worksheet is outside the records of any group company and must be prepared each year.
- An item of property,plant and equipment typically provides economic benefits over a number of accounting periods subsequent to its sale on an intragroup basis.Worksheet entries will be required over the life of the asset to adjust the effect of unrealised profits included in the carrying amount of the asset.
Learning Objectives
- Comprehend the fundamentals and methodologies involved in amalgamating financial statements for transactions between affiliated companies.
- Recognize and elucidate the effect of transactions within a group on consolidated financial reports.
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