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COMPLEX GROUPS


           Vertical Groups - Example


















           Revaluation not recorded in the records of the subsidiary

           • Land belonging to Centre Ltd was revalued at acquisition; however,

              the revaluation was not recorded in the books of Centre Ltd. An
              adjustment is required for consolidation purposes to recognise the
              revalued assets of the subsidiary (the revaluation is included in the
              analysis). A pro forma journal entry has to be passed on

              consolidation to bring the revaluation into account (refer J1).

           Deferred tax on revaluation


           • If land is revalued, deferred tax should be provided for on the total
              surplus above original cost at 22,4% (80% x 28%), irrespective of
              whether or not there is any intention to dispose of the land, as the

              carrying amount of the land (a non-depreciable asset) can only be
              recovered by means of sale.
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