A subsidiary company sells a depreciable asset to its parent at a profit after tax of $5 000.The parent depreciates the asset at 20% per annum upon transfer.in the 5th year after the transfer,the unrealised profit from the transfer is:
A)$500
B)$2 000
C)$1 000
D)$0

Question

Quizplus · Accepted Answer

By the 5th year, the asset would be fully depreciated (20% per annum over 5 years), so the unrealised profit would be $0.

A Subsidiary Company Sells a Depreciable Asset to Its Parent