About Intragroup Upstream & Downstream Sale of Depreciable Assets

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hkg scheduler
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Joined: 22 May 2022, 16:13

About Intragroup Upstream & Downstream Sale of Depreciable Assets

Post by hkg scheduler »

Dear All,

I am confused with the Accounting Treatment for the Intragroup Elimination of the Upstream & Downstream Sales of Depreciable Assets between Parent & Subsidiary.

From what I understand:
For Downstream Sales (P Sells to S)
Gain on Disposal (Dr Group RE) > Not Affect NCI
PPE (Cr Group PPE)
Excess Depreciation (Cr Subsidiary RE) > Affect NCI

However, I read from BPP ACCA Textbook it says Neither "Gain on Disposal" Nor "Excess Depreciation" should be adjusted to "Subsidiary 's Net Profit After Tax" & NOT affecting NCI at all??

For Upstream Sales (S Sells to P)
Gain on Disposal (Dr Subsidiary RE) > Affect NCI
PPE (Cr Group PPE)
Excess Depreciation (Dr Group RE) > Not Affect NCI

However, I do read from the BPP ACCA Textbook it says BOTH the "Gain on Disposal" & "Excess Depreciation" should be adjusted to "Subsidiary 's Net Profit After Tax" (so the NCI is affected)

Appreciate for any help to clarify which is the true approach?
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Marek Muc
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Re: About Intragroup Upstream & Downstream Sale of Depreciable Assets

Post by Marek Muc »

I agree with you that if the parent recognised the gain there is no NCI impact of the consolidation adjustment. The adjustment to gain on disposal would be allocated to NCI only if it was the subsidiary's gain.
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