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Forensic Accounting

Assets bought for an entity by a related entity, what are the various options for the double entry?


An entity had some items of plant and machinery paid for by a related party. I am clear about the Debit entry of the jounal.

However what should the Credit entry be:
*Other income
*Intercompany
*New Reserve set up maybe capital contribution?

asked Jan 14, 2016 in IAS 16 - Property, Plant and Equipment by lolalilo23 Level 1 Member (1,650 points)

1 Answer

0 votes
According to IAS 24 and IAS 16,

The entry for the purchase of property, plant, and equipment must be as follows:,

Property, Plant, and equipment (Debit)      xxx

Cash/ Account Payable (Credit)                     xxx

There is no effect on the journal entry due to the related party. The transactions with related parties only required disclosures.
answered Oct 29, 2016 by ammar0930 Level 2 Member (3,800 points)



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