• Profile photo of MikeLittle says

      I don’t have the question available to me so I’m guessing at this answer! Am I correct in thinking that 11,280 is the investment shown in Hillusion’s statement of financial position?

      And am I also correct that (probably) the introductory paragraph or note 1 in the explanatory notes gives you the details of Hillusion’s costs of acquiring the subsidiary?

      And when you work out those costs, do they not aggregate to 10,280?

      And isn’t there a 1,000 loan note acquisition as well?

      Remember, this is all being done “blind” so I may be incorrect in all that I have written.

      Please let me know if I am going along the right lines and then I can answer your question BUT post your reply and any further questions on the Ask the Tutor page


      • avatar says

        Yes 11,280 is the investment in Hillusion’s statement of financial position..

        yes there is a 1000 loan note acquisition as well..

        yes sir.. you are correct..

        Thanks for the clarification

      • Profile photo of MikeLittle says

        Therefore the reason why the 11,280 is not included within the consolidated statement of financial position is because we replace the “investment in subsidiary” shown in the parent’s records with the underlying assets of the subsidiary


  1. avatar says

    There are a couple of things that are unclear to me in this question and i hope you could help me. First thing is Why do we deduct PUP from CA in STofFP, usually what we do is deduct it from Ret Ear. and add it to cost of sales. This is the second exercise i see it first was Premier and this is the second. If PUP can sometime be deducted from CA what are the cases cause i cant tell seriously. Second question has to do with G/W impairment: I have seen it only once (and please forgive me if i dont remember in which exercise) G/W impairment in income statement and that was the case where even though we had a G/W impairment that was all attributable to NCI and not the parent company and in this case it was an expense for the year and therefore charged to I/S. The third question has to do with G/W impairment charged only to NCI and not the parent (even though there is a G/W impairment) Could you please remind me when does that happened? How do we understand this specific criteria? What does the question says……. Hoping for your reply

    • Profile photo of MikeLittle says

      @c0712, As it says in the lecture, net assets a year ago were $7,400 and the share price is $6 with a value of $12,000 ( 2,000 shares @ $6 each ) But the underlying asset value is only $7,400 / 2,000 shares = only a net asset value of $3.70 per share

    • Profile photo of MikeLittle says

      @gospelqueen, When Hillusion sold the goods to Skeptik, Hillusion recognised a profit of $3m ( ie $12m sale price – $9m cost )

      Skeptik has since sold $10m of those goods – ie 10/12 of the goods. So 2/12 of the goods ( that’s 1/6th ) are still in inventory and the profit on these is therefore not realised so far as the group is concerned.

      The pup is thus 1/6th x $3m = 500,000

      Clear now?

  2. Profile photo of MikeLittle says

    Paragraph 1 is the first paragraph in the question. The last “word” in the first paragraph is “$6.00.”

    Sorry eminence, but I can’t say it clearer than that.

    Yes, I can. I’ll replicate here the full sentence which includes $6.00.

    It goes as follows:

    “The market price of each Skeptik share at the date of acquisition was $6.00.”

    Than after that comes:

    “The summarized draft financial statements of both companies are:”

    Hope that helps you to find the $6.00!

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