Asset Accounting - Asset Acquisition

Interview Question – On Asset Acquisition


1. Company has purchased a ABC company and the assets are to be transferred from ABC company. So what are the steps to be taken care of .
2. For ex Asset Z has a net book value of $ 950.00 as on 02/01/2010 ( in old company). How do you show the balance in new company and what are the journal entries to be passed in new company. What are the tasks to be fulfilled?
What is the solution for this?



Answer – Please correct me if I am wrong

A. If Selling and Buying Companies are separate Entities:
(Ex: APC Value: $6000, complete retirement or sale value: $4000, Accumulated Depreciation: $700)
Accounting Entries
In Selling Company:
A/R Posting:
Customer a/c Dr (for the sale value) $4000
Revenue –Asset Retirement Cr $4000
Asset Posting:
Clearing of Asset Retirement Dr $4000
P&L (Loss) Dr $1300
Accumulated Depreciation Dr $700
Asset Cr $6000
In Buying Company:
Asset Dr $4000
Vendor Cr $4000
Note:

• Posting date of the document will be copied into the asset master as the capitalization date.

• The depreciation start date of each depreciation area will also be determined and updated in the depreciation area data tab page.

• Asset acquisition posting could also be done without PO from the MM module.

• Posting could be done in FI posting only.

B. If selling and buying Companies are Inter Companies
Accounting Entries
In Selling Company:
A/R Posting
Inter Company Customer a/c Dr (for the sale value) $4000
Revenue –Asset Retirement Cr $4000
Asset Posting
Clearing of Asset Retirement Dr $4000
P&L (Loss) Dr $1300
Accumulated Depreciation Dr $700
Asset Cr $6000
In Buying Company:
Asset Dr $4000
Inter Company Vendor Cr $4000
1. Note:

• Posting date of the document will be copied into the asset master as the capitalization date.

• The depreciation start date of each depreciation area will also be determined and updated in the depreciation area data tab page.

• Asset acquisition posting could also be done without PO from the MM module.

• Posting could be done in FI posting only.

2. Note:

The process for posting intercompany transactions is as follows:

• The initial entry is parked.

• Then an email is sent to the other branch to view the document.

• On approval of the transaction, the parked document is then posted to the g/l in both companies. The company receiving the revenue will be the one responsible to book into system using the US dollar as base currency.