Allocation of Depreciation by Corporate Office

Hi, looks like it is rent-free lease agreement where the treatment is prescribed under IFRS 16 Leases standard. If you can give me your organisation structure eg. subsidiary, joint ventures, I might be able to help you further. 

Cost Center analysis is done for internal decision purposes only. But while reporting all costs are absorbed into the report irrespective of the costing method. Next, an asset is a resource controlled by an entity which arose from past events and will yield future economic benefits.

This car was purchased by parent company for a consideration expecting future economic benefit through its operations.

This car is no longer controlled by the parent when the benefits are reaped by subsidiary. 

This car is not leased as there are no rentals. 

This car cannot be shown as a sale because the subsidiary did not purchase it and parent did not sell it.

This car is a loss. So it must be written off from parents financial statements as a loss.

This car cannot be shown in the parent’s statements as a fixed asset because, it is going to be depreciated twice when consolidating and it will get a benefit of tax exemption twice. 

This is the main reason why, only, either a parent or a subsidiary, who ever wants to retain the ownership of the car, must depreciate at Full Cost. Both parent and subsidiary cannot depreciate. 

Finally, who ever wants to take care of the care, either parent or subsidiary, must recognise it as a fixed asset and depreciate fully at cost or NBV. 

However, the parent company has the right to distribute its assets to owners and internal stakeholders, so let the parent keep the fixed asset and depreciate it. 

Ok fine. A car should be fully depreciated and not partially. This is the accounting treatment. Who ever will do it, can do it.