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CONSOLIDATIONS AFTER THE DATE OF ACQUISITION
The Elimination Of Common Items
• A tax adjustment must be made to allocate the tax
on the intragroup profit to the same accounting
period in which the unrealised profit will be
realised.
• The tax adjustment is done by crediting the income
tax expense (decreasing the expense) in the profit
or loss section of the consolidated statements of
comprehensive income, and debiting the deferred
tax account in the statement of financial position
(tax is prepaid, thus a debtor is created).
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