1. avatar says

    Hi Good Day say I’d just like to ask something? Where you said that less likely or possibly the ask you to find out the goodwill and there’s a fair value adjustment which is more, can it be where the fair value adjustment can be where it is less? Or does it always be more?

  2. Profile photo of waseem says

    Hey john,
    I am bit confused with terminology. Why did you call them retain earning instead share premium or Capital reserve. Because in revenue reserve we keep retain earming from actual profit and also we may not distribute the Capital reserve. If you put them in same account how will we distinguish between them. Thanks

    • Profile photo of John Moffat says

      I assume that you have the Lecture Notes in front of you when you are watching the lecture, because in the question the figures given are for retained earnings and therefore they cannot be capital reserves.

  3. avatar says

    Good day John, firstly I want to thank you for these great lectures. I jus have one question for clarification if you dont mind. @ 7.49 in this recording am I looking at the balance sheet value of the subsidiary S or Parent P?

  4. Profile photo of Morlean says

    Good Night Sir.
    In question 4 where they asked for retained earnings isn’t the $14400 supposed to be added to the $48000 for Z? The most appropriate answer there is $216,000 that is just A’s earning for $168,000 and Z’s for $48,000. Could you explain for me please?

    That’s in the Test question.

    • Profile photo of John Moffat says

      The consolidated retained earnings are those of the parent (168,000) plus the parents share of the post-acquisition earnings of the subsidiary (100% x (48,000 – 14,400) = 33,600)

      I do deal with this in the lecture, and I do suggest that you watch it again.

  5. avatar says

    Just an FYI… On the test the extract used for the questions, says : P acquired 100% of the share capital of Q… but the accounts refer to P & Z… Not a big issue but just wanted to point it out. :)

  6. avatar says

    Mr Moffat thank you very much indeed for these lectures. They are very helpful and I already passed my f2 exam by a margin thanks to your lectures.

    If I could make a suggestion, is it possible to add number of minutes next to subsection names, so we could plan our time on these lectures, i.e. how much time we would have to spend going through a particular sub section of a chapter.

    Many, many thanks.

  7. avatar says

    Dear sir,

    When you calculate goodwill, why is the share capital of S, retained earnings and extra fair value on NCA the net assets of S? Why is the NCA, CA and CL not considered?

    Really confused about this, hope you will enlighten me!

    Lastly, the calculation of retained earnings, why is the company P not entitled to the retained profits of $6000 (pre-acquisition profits) when they acquired company S? \

    Many thanks!

    • Profile photo of John Moffat says

      The definition of net assets is non-current assets + current assets – current liabilities – non-current liabilities. The net assets are always equal to the total capital i.e. share capital plus reserves (in this case retained earnings).

      Company P is entitled to their share of pre-acquisition profits – that was part of the reason for the amount that they paid for their shares. The net assets at the date of acquisition would be equal to the total capital at the date of acquisition – i.e. share capital plus retained earnings at the date of acquisition.

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