Which book are you referring?

I have the 2008 edition of Becker Passmaster and question goes like this (CPA-01143):-

sanju06 wrote: When they ask elimination entry, do we do it as at the date of consolidation or the year end balance sheet date. How are we to decide? In the text I saw the elimination entry being done for the year end.

At the date of acquisition, you always do the following JE :-

DR Investment in subsidiary

CR Cash/ Common Stock

CR APIC (if issued CS)

Elimination always happens at year-end when both parent's and subsidiary's books are consolidated for financial reporting purposes:-

Do the elimination JE using “CARIMAG” approach

sanju06 wrote: Next is with regard to depreciation for the increase in valuation of assets. Isn't the entry supposed to be- Dr.Earnings Cr. Investment How come credit has not been given to investment.

Remember, investment account has already been eliminated as above.

Now post a JE as you always do for depreciation. We are posting only incremental depreciation as subsidiary company has already recorded depreciation on original cost.

This is the incremental depreciation recorded on increase in asset value(as per above elimination JE).

Hope this helps !