On the 1 January 2023, Garak's Goods Ltd sold some plant to Kleen Ltd for $82,000. Garak's Goods Ltd had originally paid $120,000 for this asset, and by the time of sale had charged accumulated depreciation of $48,000. This asset is used differently in Kleen Ltd from how it was used in Garak's Goods Ltd. Depreciation charged on plant by Garak's Goods Ltd was 10% p.a. using the straight line method, while Kleen Ltd applies a rate of 7% p.a. The Chief Accountant was unsure of which amount the depreciation rate should be applied to and which depreciation rate should be used when preparing the consolidated accounts. Please explain what I need to do with the transaction and show any journal entries necessary.

Answer rating: 100% (QA)

When selling an asset that has been depreciated there are several considerations to take into accoun... View the full answer