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June 1, 2016 at 7:36 pm
January 22, 2016 at 4:31 am
Greetings Mr. Little. In the example of Remigius and Ilona, where remigius acquired 75% of ilona, we calculated the value of the subsidiary assets by adding shares and retained earnings at acquisition (32 000+ 60000= 92000)
In the example of Ivona and Guido, Ivona buys 60% of guido for $100 000. I calculated the value of subsidiary assets by adding shares + retained. Just like the example of remigius, i took the total value of the shares ($1.65* 80000= 1320000). This gives the total value of the company as = 132000 + 40000(retained)= 172000. Our nci figure is therefore 68800.
Question= To get the value of subsidiary net assets at acquisition, are we not to add the TOTAL value of the shares to the retained earnings at date of acquisition/ your assistance would be appreciated sir.
January 22, 2016 at 8:57 am
Have you read the notes carefully? Have you listened to the lectures at all?
The value (book value) of a company’s net assets = capital employed
This is something you should remember from F3 days (or university if you were ill-advised and claimed exemption from F3)
Capital employed is share capital + reserves.
How can a company possibly control the MARKET value of its shares where that market value is determined by speculators, gamblers, and ordinary people that fancy a dabble on the stock exchange.
If you and I struck a private deal to buy and sell 400 Telecom plc shares at a price of $20 each, does that mean that the value of the company has increased four-fold even though the price on the open market is only $5
January 23, 2016 at 10:46 pm
I feel like an idiot. Once again sir, your help has been invaluable, thank you.
January 24, 2016 at 9:54 am
No worries Joseph and, don’t worry! There are lots of others that are worse 🙂
October 5, 2015 at 10:54 pm
How are you? I need to ask that why loan notes is deducted or added to Parents Investment and how we deal loan notes in CSFP?
January 12, 2015 at 6:36 am
As always awesome lectures
Can you please tell how calculate NCI value on example 7 Where goodwill of $5000 is given?
and What will happen if impairment of 10 % is used ?
Thanks In Advance
January 12, 2015 at 10:18 am
Example 7 is not related to example 6 where the goodwill figure is given (in example 6)
Instead example 7 illustrates the working W2 where the value of the nci investment is given.
Similarly example 8 illustrates the working W2 where the value of the nci is based on the market value of the subsidiary’s shares as at date of acquisition
Example 9 is asking you to rework the workings where you are told that goodwill is to be impaired by 10% – there is a brief explanation of what to do at the bottom of example 8, just before example 9
If you’re still having problems, post again
January 13, 2015 at 12:39 am
Thanks a lot sir
January 13, 2015 at 11:32 am
May 14, 2015 at 4:15 am
im a bit unclear as to what to do with the $5000 goodwill attributable to the nci (eg. 6) should i add it to the calculation of the value of the nci investment?
May 14, 2015 at 6:12 am
We need this information in order that we can arrive at the value of the nci investment as at the date of acquisition
Concentrating SOLELY on the nci (I show this in the video lectures) nci goodwill is equal to the value of their investment less their proportionate share of the subsidiary’s fair valued net assets.
Agreed so far?
We know the value of their goodwill – it’s given in the question
And we know the value of their proportionate share of the subsidiary’s fair valued net assets
Therefore we can calculate the value of the nci as at date of acquisition
January 2, 2015 at 3:59 pm
I didnt know how to start f7 earlier, but once I saw your lecture I really enjoyed it and now I am continued with that. You are so confident on what you say, makes me confident too. You also make us keep smiling with your phrases and thats so funny as well!
In this video I am curious how you got $1.65 per share at W2 of Example 6?
January 2, 2015 at 8:38 pm
Hi, Thanks for your kind words.
As for $1.65, I believe that you will find that information on page 42!
Am I right?
May 23, 2016 at 4:19 pm
Nope, It’s page 40 now. Don’t know why it is NOT included in the main question. I had the very same question, until I run into it.
November 23, 2014 at 10:55 am
thanks alot. The lectures are very interesting!
November 10, 2014 at 6:45 pm
I just want to say that I have always hated Group accounts and now thanks to these lectures I’m finally learning it the proper way and actually loving it too. The lecturer is so much fun too! 🙂
November 10, 2014 at 10:33 pm
I think that I’m fun too, but not everyone agrees! Enjoy your studies! If they’re a chore, a burden, then that makes them so much harder
November 4, 2014 at 10:38 pm
Im trying to watch the F7 lectures but when i go into headings i find F3 lectures. at 1st i thought theres some error so i pressed play, and the content is from F3. then i thougth its just me, i looked at the heading again, its written ‘Other Reserves, Mid year acquisition’ but playing F3 lectures.. HELP please.
August 15, 2014 at 2:48 pm
Please I don’t understand how u get $1.65 per share on value of nci investment? I do understand the 32000 shares (40%*80000 shares)
August 15, 2014 at 2:53 pm
The video shows you the question page reference “page 42, Ivona and Guido”
may I ask you to read the question and, if you still have a problem, post again
August 20, 2014 at 11:59 am
ok thanks, I got it.
August 20, 2014 at 12:25 pm
Thank Heavens for that! I was about to write some ultra-sarcastic comment like “Which bit of the top line on page 42 do you not understand?” but thankfully you saved me from being so cutting
July 11, 2014 at 5:26 pm
Dear Mike Sir,
Regarding the doubt of (Ivona & Guido) Page 40, Example 6 (Ch-7):
Thanks for the clarification. I have now understood all the 3 cases of the nci investment valuation given in eg 6,7 & 8.
July 11, 2014 at 5:30 pm
Good – now practice the mini-exercises at the end of the notes. And watch out for the new set of notes to be uploaded soon – there are a LOAD more mini-exercises for you to practice on – all of them from past exam questions
July 14, 2014 at 2:33 pm
Thank you very much, Mike sir. I will practice the mini-exercises and wait for the new set of notes..
July 14, 2014 at 2:43 pm
July 10, 2014 at 6:13 pm
In the question (Ivona & Guido) Page 40, Example 6 (Ch-7):
What do we do of this information? ‘The Ivona directors have valued the goodwill attributable to the NCI at $5,000’.
Where have we used this figure in solving this question?
Here’s the full ques:
Ivona bought 60% of the shares of Guido for $100,000 when the Guido retained earnings were $40,000. The Ivona directors have valued the goodwill attributable to the nci at $5,000. Goodwill has not been impaired since acquisition. At 30 June, 2010, the respective Statements of Financial Position were
July 10, 2014 at 8:19 pm
OK, we need to know the value of the nci investment. (We need that in order to work out the goodwill on acquisition) Tell me the figure for the nci investment at date of acquisition and I’ll calculate the goodwill for you.
Hear from you soon 🙂
July 10, 2014 at 9:37 pm
Referring to:(Ivona & Guido) Page 40, Example 6 (Ch-7):
I am a bit confused with two things actually:
1) We have not used the amount ‘5000’ in the working 2 (goodwill). So, if we have not used it here, then how & where is this ‘5000’ used?
2) Secondly, while calculating the ‘Value of nci investment’, we do: 40% of 80000 shares= 32000. Then 32000x $1.65. My question is. how have we calculated this ‘1.65’?
July 11, 2014 at 6:33 am
Hi, I’m not surprised that you are confused! You appear to be looking at answers to two different questions at the same time.
Let’s deal with the $1.65 x 32,000 shares first. That’s actually part of the answer to example 8 on page 42 and has not much relevance to example 6 on page 40. Is that bit ok, now?
Now, $5,000 goodwill not used anywhere in the answer! Well, it IS in my copy of the notes. And, what’s more, it’s exactly where you would expect it to be – in working W2 Goodwill on page 154.
I suspect that you have been looking at the wrong answer again as you were with the $1.65 issue.
June 5, 2014 at 2:29 pm
Please mike,can you help me with the calculation of the nci investment valuation on example 10 chapter 7???
June 5, 2014 at 4:32 pm
sorry mickey don’t bother replying to this.i figured it out.thanks again
June 6, 2014 at 6:46 am
I’ve only just seen these posts from you. If you want to direct a question to me and know that I shall see it and reply, post it on the “Ask the tutor” page
June 6, 2014 at 9:13 am
May 12, 2014 at 8:16 pm
Please tell me the 55000 for NCI working 2 given in answers in the course notes is not correct??
April 26, 2014 at 3:19 am
I must say that this will be my first attempt at this paper and after following your lectures i am confident that i will do well. Your ability to simplify is amazing and I honestly wish you were my classroom lecturer here,
Thank you thus far for making the puzzle worth building ,,,,looking forward to sharing good news when i get results in August …:)
April 17, 2014 at 3:36 pm
I am confused as to why the Liabilities (160k + 190K) were not added to the Consolidated Statement of FP of the Ivona group (example 6). The proforma for CS of FP I have been following is this:
Goodwill (W2) xxx
Other Assets xxx
the total of the above two amounts balances off the total of the following amounts:
Share capital (parent only) xxx
Retained earnings (W3) xxx
Nci (W4) xxx
Up till now, this hasn’t been a problem. But for the Ivona-Guido example, the ‘Liabilites’ at the end has been completely omitted and the statement balances without it. I am very confused right now. Please explain this!!
Thank you 🙂
June 6, 2014 at 6:48 am
I think if you look you’ll see that, instead of “current assets” we have “other net assets”
April 8, 2014 at 1:24 am
just to clarify is the 1.65 a made up figure in example 6 ivona? if not can you please say how you got it? thanks.
April 18, 2014 at 11:39 pm
This figure is given in example 8 on page 42 of course notes.
March 27, 2014 at 1:01 pm
hello sir… where did u learn teaching techniques ???? the way u explain is the safest and easiest way to understand any hard part of question… u r the man……. wow..thank you..
March 5, 2014 at 4:53 pm
Dear Mr Little how did you arrive @ $53000 or 52800 for 32,000 shares in the example of ivona and guido ? it confuses me
March 5, 2014 at 5:37 pm
Hi, I don’t have the notes handily available at the moment but, do I not remember that I say immediately before, “now let’s assume that the shares are worth $XXXX” and that will give me the $52,800?
February 5, 2014 at 9:18 am
Hi Sir, I’m a bit lost in this lecture, for workings 2(goodwill) of example 6, where do we get $1.65 for each share? Is it not $1? Thank you.
February 5, 2014 at 11:00 am
Hi – what’s the name of the question?
February 5, 2014 at 11:33 am
It’s the Ivona and Guido question, example 6 with requirement:
Prepare the consolidated SOFP as at 30 June,2010.
It’s with working 2 that I’m confused with sir.
For value of nci investment, you did 40% x 80000 shares which equals to 32000 shares @ 1.65$ each. It’s the 1.65$ each part I didn’t understand where you got it from?
This consolidation chapter is a bit tough, but I won’t let it affect me, I’ll keep on practicing till I get a good grasp of it 🙂
February 5, 2014 at 11:39 am
is it not simply the value of the nci (53,000) divided by the number of shares held by the nci (32,000)?
It sounds like a throw-away line that I’ve mentioned as I was calculating the total goodwill.
The $1.65 is not integral to the question – it’s simply a little bit of “extra” information that we can derive from the figures as they work out. In fact, the more correct value would be 53,000 / 32,000 = $1.65625
September 9, 2013 at 10:09 am
hmm.. Why have we not charged any impairment of GW to NCI? Is it because we took the NCI of the Share Capital and multiplied it with the share price, so in effect it means that NCI is a % of the Subsidiary’s Net Assets? Please throw some light on this!
September 9, 2013 at 10:12 am
We have not considered the impairment at all! Why is that so? 🙁
September 9, 2013 at 10:17 am
Oops! I got it.. You’re coming to the impairment in the later part of the lecture! 😛 Thank u.. 😀
September 9, 2013 at 4:57 am
If the subsidary has a diffrnt year end date within 3 months dat of the parent??Den wat to do ….
ANd when If the period is greater than 3 months?
September 6, 2013 at 11:07 am
simple and straight forward lecture
September 6, 2013 at 7:27 pm
August 12, 2013 at 3:04 pm
easy to understand and good lecture thank you so much
July 4, 2013 at 8:15 pm
Great lecture, I understand now..thanks, your style of lecturing is so unique and interesting, it keeps me wanting to listen!
June 26, 2013 at 11:26 pm
I notice in the previous examples , regarding the goodwill working, the NCI is calculated as a % of the net assets consisting of share capital & retained earnings. However, in this question where the share price was increased to $1.65, 40% of the retained earnings was NOT included as part of the NCI value in the goodwill calculation, could you please explain why?
July 1, 2013 at 12:32 pm
oh, i got it…..its that way because its at fair value!
March 14, 2013 at 2:50 pm
My name is Alicia.
My question relates to the example 7 on page 41 (Ivona and Guido), were Guido shares were worth $1.65 immediately BEFORE the acquisition by Ivona. I am confused about W2 Goodwill calculation (Fair value of net assets @DOA). Why equity shares have value of $80000? It is not logical for me. Why not 80000 X $1.65 =132000? we are told that Guido shares were worth $1.65 immediately before the acquisition (@DOA). So far everything was clear and easy to understand and now I am a bit lost. Please explain. Many thanks
April 27, 2013 at 5:42 pm
The equity share value is $80,000 as there are 80000 $1 shares in issue. The share price is only relevant to the calculation of the NCI investment (80,000 @ $1.65 * 40%).
There are only 80,000 $1 shares in issue.
January 21, 2013 at 9:40 pm
Great lecture, penny starting to drop 🙂
November 12, 2012 at 6:54 am
i dont understand. for example 7 it says value of NCI is $55,000 in the question.how come for calculation of Working 2, the value of NCI came as $52,800? what happened to $55000?
November 12, 2012 at 10:58 am
@loopheichuen, Is this an Ivona and Guido example? If so, the same basic figures apply with the exception of me changing the basis of the nci calculation and for that reason I’ve changed the figures so that three different answers are arrived at.
Otherwise there would be a danger that you may think “there are three ways of arriving at the same figure and I’ll just concentrate on the one I find easiest”
You need to be comfortable in all three full, fair ways as well as with the proportional method
October 17, 2012 at 4:48 pm
Double check W1 – Ivona bought 60%. G is the subsidiary not I.
August 20, 2012 at 12:54 am
Like ur ambition in life……….u to funny Sir.
April 28, 2012 at 2:24 pm
CAN ANYONE HELP HOW SHARE PRICE $1.65 CAME 🙁
April 28, 2012 at 11:46 pm
@omeraminmalik, It’s given in the question, Ex-8, continuation of ex 7 but with a fair value of $1.65!!!
April 25, 2012 at 9:52 pm
So? is it FV of SNA or SNA? 🙂
April 25, 2012 at 9:51 pm
Ivone is paying $100,000 / 42,000 shares => $2.08 / share while the NCI are paying $1.65/share…which would mean that Ivone would end up at consolidation with a G/w of 20,800, OA 250,000 ->Total assets 270,800? Shares 70,000, Ret ears 120,000 and NCI 80,800…i think I m getting it wrong somewhere…
April 25, 2012 at 9:30 pm
Hi, at example 8/page 42..I can see why you are computing the G/W as you are doing it, but I don t understand at (w2) why you keep saying FV of SNA@doa if you are actually considering the SNA and not the FV of the SNA. In this example the FV of SNA @doa should be 80,000 shares x $1.65/ share, right? 🙂
April 21, 2012 at 4:36 pm
the calculation is incorrect. the shares that is used in the question he always said it should always only ever be the parent company which is $70,000 and not $80,000.
April 21, 2012 at 5:59 pm
@totalwork, Hi Totalwork. Give me a clue, which calculation? Which question?
I think you’re probably wrong, but I’ll do you the honour of checking 🙂
April 21, 2012 at 6:00 pm
@totalwork, and please reply on “Ask the tutor” Otherwise, there’s a good chance I’ll miss it if it’s just on “latest posts”
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