| Course | AC450 Advanced Accounting |
|---|---|
| Unit | Unit 6 |
| Paper type | Fixed asset transfer entries |
| Length | About 560 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Accounting |
| Updated | October 2026 |
Free sample paper for AC450 Unit 6
A Milling Machine Sold Inside the Group: Unit 6 Fixed Asset Transfer Entries for Two Years and Five
[Student Name]
Purdue University Global
AC450: Advanced Accounting
Unit 6 Fixed Asset Transfer Entries
[Instructor Name]
[Date]
The companies and every figure are composite; the standard and textbooks cited are real.
Facts
Calder had owned the machine for six years and depreciated it straight-line, with $240,000 of accumulated depreciation at the transfer date. Brookfield bought it for $360,000 and depreciates it over its remaining five-year life, $72,000 a year. Had the group kept the machine on Calder's books, depreciation would have continued at $52,000 a year on the $260,000 book value. Calder recorded a $100,000 gain on the sale.
The 2027 Entries
Entry TA. Debit gain on sale $100,000. Debit equipment $140,000, raising the machine from Brookfield's $360,000 to the group's $500,000 original cost. Credit accumulated depreciation $240,000, so the group shows the machine with the history it always had.
Entry ED. Debit accumulated depreciation $20,000; credit depreciation expense $20,000. Brookfield charged $72,000, but the group's depreciation is $52,000, so $20,000 of excess depreciation is removed.
Removing excess depreciation each year is how the deferred gain is gradually recognized, because the group earns the $100,000 only as the machine is used up, and each year's $20,000 adjustment releases one-fifth of it.
Restoring cost and accumulated depreciation, rather than simply removing the gain, matters because the consolidated balance sheet should show the machine exactly as the group has always held it, at its original cost less depreciation to date. A net figure would hide its age.
The 2028 Entries
Entry *TA. The gain is gone from the 2028 income statement, so the remaining deferral is charged to opening retained earnings. Debit Calder's opening retained earnings $80,000, the $100,000 gain less the $20,000 realized in 2027. Debit equipment $140,000. Credit accumulated depreciation $220,000, which is $240,000 less the $20,000 adjustment carried forward.
Entry ED. Debit accumulated depreciation $20,000; credit depreciation expense $20,000, as before.
The charge goes to Calder's retained earnings because the sale was downstream: Calder, the parent, sold and recorded the gain, so the family's noncontrolling interest bears none of it.
Schedule of the Unrealized Gain
At the end of 2027, $80,000 remains deferred. At the end of 2028, $60,000. At the end of 2029, $40,000. At the end of 2030, $20,000. At the end of 2031, the machine is fully depreciated and the deferral is zero.
If the Machine Had Gone the Other Way
Had Brookfield sold the machine to Calder, the sale would be upstream. The entries would be the same in amount, but the deferral would reduce Brookfield's income before the split between Calder and the family, so the family would absorb a fifth of the deferral each year and share in each year's release. In 2028, the opening retained earnings charge would fall on Brookfield's equity rather than Calder's (Hoyle et al., 2021).
If the Asset Were Land
Land is not depreciated, so no part of a gain on land would be released through depreciation. The deferral would repeat on the worksheet every year until the group sold the land to an outsider (Christensen et al., 2019). The consolidation standard requires intercompany gains on assets still held within the group to be eliminated in full (Financial Accounting Standards Board, n.d.).
References
Christensen, T. E., Cottrell, D. M., & Budd, C. S. (2019). Advanced financial accounting (12th ed.). McGraw Hill.
Financial Accounting Standards Board. (n.d.). Accounting Standards Codification Topic 810: Consolidation. FASB.
Hoyle, J. B., Schaefer, T. F., & Doupnik, T. S. (2021). Advanced accounting (14th ed.). McGraw Hill.
The Purdue Global AC450 Unit 6 instructions
Unit 6 of AC450 asks you to eliminate a gain on a fixed asset transferred between affiliates and follow it through later years. State the asset's original cost, accumulated depreciation, transfer price, remaining life and the direction of the sale. In the year of transfer, remove the gain and restore the asset's original cost and accumulated depreciation so the group shows it as it always held it. Remove the excess depreciation the buyer charges on the higher transfer price. In the following year, charge the remaining deferral to the seller's opening retained earnings instead of the gain account, and continue the depreciation adjustment. Build a schedule showing the deferral declining to zero. Explain how the entries would change if the sale were upstream, and what happens with a non-depreciable asset such as land. Cite the consolidation standard and advanced accounting texts in APA 7.
How this AC450 Unit 6 example is built
The sample states the machine's history, Brookfield's $72,000 annual depreciation and the group's $52,000. Entry TA debits the $100,000 gain and $140,000 of equipment and credits $240,000 of accumulated depreciation. Entry ED removes $20,000 of excess depreciation. The highlighted sentence explains that each year's adjustment releases a fifth of the gain. A paragraph explains why cost and accumulated depreciation are restored. The 2028 entries charge $80,000 to Calder's opening retained earnings and restore $220,000 of accumulated depreciation, noting that a downstream sale leaves the family unaffected. A schedule runs from $80,000 at the end of 2027 to zero at the end of 2031. Variations explain an upstream sale and land, citing Hoyle and colleagues, Christensen and colleagues and ASC 810.
AC450 Unit 6 rubric: what earns full points
AC450 fixed asset transfer problems are graded on the full restoration of the asset and on correct treatment in later years. The gain must be removed, and graders deduct when the asset is simply reduced to book value without restoring original cost and accumulated depreciation. Excess depreciation must be computed as the difference between the buyer's charge and the group's. In later years the deferral must move from the gain account to opening retained earnings, net of amounts already realized, and accumulated depreciation must be adjusted for prior years. The direction of the sale determines whose retained earnings is charged and whether the noncontrolling interest shares the effect. A schedule to zero shows the gain's realization over time. Addressing land shows understanding of why depreciation matters. Clean entries and APA 7 citations complete the Purdue Global grade.
Common AC450 Unit 6 mistakes, and how to avoid them
Many Unit 6 answers remove the gain in the first year and forget it in the second, so the gain resurfaces in consolidated retained earnings. Others reduce the asset to book value as a net figure, hiding its age. The depreciation adjustment is computed on the wrong base or recorded in the wrong direction. The later-year charge is made to the buyer's retained earnings in a downstream sale. Land transfers are given a depreciation adjustment. If your problem has an upstream transfer, a mid-year date or a different remaining life, our writers can build both years' entries and the schedule.
Get an AC450 Unit 6 example written to your instructions
Which company sold, and when? Those two answers set the direction and the first year, so put them at the top, followed by the seller's cost, accumulated depreciation, price and remaining life, then the rubric. Every requested year returns entered and explained within 24-48h, deferral schedule included, and a first custom set is free. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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AC450 Unit 6 questions, answered
Why restore accumulated depreciation instead of just removing the gain?
Because the consolidated balance sheet should show the machine exactly as the group has always held it: 500,000 of cost and the depreciation built up on that cost. Removing the gain against equipment alone gets the net figure right but misstates both lines, and anyone checking the property note would see the machine carried at a cost nobody in the group paid.
What if the transferred asset is land?
Land is not depreciated, so no part of the gain is released through depreciation. The deferral stays on the worksheet every year until the buyer sells the land to someone outside the group, when the gain is finally realized. The entries are simpler, but they repeat unchanged for as long as the land stays inside the group, which some problems test over several years.
Can the entries be built on my own problem's transfer?
Yes. Send the asset's cost, accumulated depreciation and transfer price, the remaining life, the date, which company sold, and what share of the subsidiary the parent owns, with the rubric. The sample returns entries for every year the problem asks about, a deferral schedule, and a noncontrolling interest computation whenever the sale ran upstream.
Where can I find a free AC450 Unit 6 sample paper?
This page holds a complete AC450 Unit 6 set of fixed asset transfer entries for a machine sold within a composite glassworks group, with 2027 and 2028 entries, a deferral schedule, two variations and APA 7 references.
Why is depreciation reduced by $20,000 in AC450 Unit 6?
Brookfield depreciates the machine's $360,000 price over five years, $72,000 a year. The group would depreciate its $260,000 book value, $52,000 a year. The $20,000 difference is excess depreciation.