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  1. Avatar of Swati says

    Dear Sir,

    Referring to :F7 June 2010 Question 1 Picant:

    While calculating the cons. ret earning, we have taken increase in FV of property (i.e 2000) and its depreciation. But why have we not taken software decrease (i.e -500) ? What’s the reason?

    regards,
    Swati.

    • Avatar of MikeLittle says

      Again, from memory, the software was written off completely. The property fair value adjustment could have been shown in the same way that Kaplan and BPP show it – they do not include the fair value adjustment in the “bottom” section of working W3. They merely show the post-acquisition movement so, in the example you quote, the two big tuition companies would show just the depreciation post acquisition on the fair value adjustment.

      I prefer to show $2,000 less associated depreciation in the top section of the working and then $2,000 fair value adjustment as at date of acquisition in the bottom section

      Each to their own!

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