Why does GAAP require the deduction of annual depreciation on the excess fair value assigned to...
Why does GAAP require the deduction of annual depreciation on the excess fair value assigned to subsidiary assets during a consolidation?
Homework Answers
Answer: As per GAAP, During consolidation Parent company records assets of Subsidiary company at the Fair Market value of the assets at acquisition date. Therefore due to such excess between the Book value of the assets and the fair market value of assets is being recorded in the books of Parent company, the parent company records depreciation at the recorded fair market value instead of subsidiary's book value and this is the reason for such excess annual depreciation being recorded during consolidation.
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Why does GAAP require the deduction of annual depreciation on
the excess fair value assigned to...
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