How must a consolidated SFP show transferred non-current assets?

A consolidated statement of financial position (SFP) needs to reflect non-current assets in a manner that provides a clear and consistent view of the financial position of the group as a whole. When non-current assets are transferred between entities within the same group, the standard practice is to recognize these assets at their original cost to the group.

This approach maintains the integrity of the consolidated financial statements by ensuring that the group’s accounting policies are applied consistently across all entities. Using the original cost reflects the investment made by the entity that acquired the asset, providing clarity on how much value has been added through subsequent improvements or depreciation.

If an asset were to be reported at its fair value, it could lead to inconsistencies, as fair value can fluctuate significantly based on market conditions and other external factors. This may not accurately represent the underlying investment cost of the assets to the group. Similarly, evaluating assets at their resale value does not provide a true picture of their utility and potential within the group for operating purposes.

Therefore, maintaining the original cost for transferred non-current assets aligns with the principles of faithful representation in financial reporting, allowing users to understand the costs embedded in the assets as part of the overall financial health of the group.