When a subsidiary buys and sells fixed assets at a fair price, the seller shall write off the original value and depreciation and record the net value of the buyer. Does the consolidated report need to restore the original value and depreciation? Source?
When subsidiaries buy and sell fixed assets at a fair price, the seller writes off the original value and depreciation, and the buyer records the net value, which will indeed lead to the reduction of the original value and depreciation at the same time, but the net value remains unchanged. In the consolidated statement, this kind of transaction needs to be restored to the state where it did not happen, that is, the original value and depreciation of fixed assets need to be adjusted to reflect the original state.
These Provisions come from Article 28 of the Accounting Standards for Enterprises No.33-Consolidated Financial Statements of Enterprises. Specifically, according to this provision, when preparing consolidated financial statements, related transactions should be offset internally to restore the financial position before the merger. Transactions between subsidiaries should be handled according to their nature and impact on consolidated financial statements, and adjusted accordingly. Under the above circumstances, the original value and depreciation of the seller should be adjusted back to reflect its real financial situation.
I think the content is good, please adopt it.