Why does an intra-entity sale of a depreciable asset

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Reference no: EM13139318

James Inc., sells inventory to Matthews Company, a related party, at James’s standard markup. At the current fiscal year-end, Matthews still holds some portions of this inventory. If consolidated financial statements are prepared, why are worksheets entries required in two different fiscal periods?

Why does an intra-entity sale of a depreciable asset (such as equipment or a building) require subsequent adjustments to depreciation expense within the consolidation process?

Reference no: EM13139318

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