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In partial Acqusition(Ord.investment to Subsidary OR Associate to Subsidary) we calculate ‘Profit on deemed Disposal’ then add it to parent retained earnings.
Do we do the same with Partial Acqusition of Ord.investment(10%) to Associate(25%). Do we need to calculate the gain on deemed disposal, or just have to make it(FV Deemed Disp) part of goodwill?
Sir can we use black gel pen or black uni ball pen or black pointer in exam
@omerchamp, Your examination instructions will tell you what you can use and not use!
YEAH…i was thinking that …if parent acquire 15 % first ..it becomes asset of parent…so no need to make fair value adjustment at acquisition date in subsidary net asset account….
May i know that….we made deemed disposal on date we controlled subsidary, so profit arisesd on disposal as fair value adjustment…will this fair value adjustment be part of opening retained earning???when calculating good will???as fair value adjustment is at acquisition date
@syedwaqar, Yes, if you follow the logic through, the fair value of the deemed disposal proceeds is the opening line of the calculation of goodwill ( I presume that you are referring to the situation where we are acquiring a subsidiary which previously had been an associate ).
But that opening line is the fair value of the investment – it’s not the fair value of the proportion of the associate’s assets so no adjustment will be made to the investee’s assets – unless they choose to make that adjustment ( which rarely happens in an exam question! )
Is that ok?
Are these lecture helpful for dec 2011 exams.. because what i know before the methods were different?
Watch next part – see the list of all lectures for this chapter
the lecture just ended abruptly without completing the disscussion.cant get the cost of the investment of the make up example.
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