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This lecture is applicable for Paper F7 but is also a revision lecture for Paper P2
Agne acquired 72% of the equity shares of Dace on 30 June 2009 for $250,000.
On 31 August 2009, the Statements of Financial Position were:
1. At the date of acquisition, some of Dace’s inventory had a fair value $16,000 in excess of its carrying value. All had been sold before the year end.
2. On 31 July 2009, Dace had sold an item of property, plant and equipment to Agne realising a profit on sale of $20,000. Agne was depreciating this item over its remaining useful life of 4 years. It is group policy to charge a full year’s depreciation in the year of purchase, and none in the year of sale.
3. On 29 August, Agne had despatched goods to Dace at a transfer value of $26,000. Agne sells goods at a mark up of 30%. Dace had sold a quarter of these goods by the Statement of Financial Position date.
4. The current accounts did not reconcile at the year end because Dace had sent a payment of $5,000 to Agne, but Agne only received it on 3 September 2009. Before any necessary adjustment, the intra group balance in Dace’s records showed an amount owing to Agne of $12,000.
5. Goodwill is impaired by 25%.
6. Both entities have declared but not yet accounted for a dividend of 5c per $1 share.
7. The directors valued the nci at $87,667 at date of acquisition
Prepare a Consolidated Statement of Financial Position for the Agne Group as at 31 August 2009.
so, is this vedio prepared for Dec 2012 exam ? shall we use that note ?
this example is in the note for Dec 2012 exam .
@admin
Hi,
This video doesn’t corroborate with the Example 1 question in the P2(Chapter 1) or F7(Chapter 9) notes provided.
Could you make the question available please
Many Thanks.
New lecture will be on line in February
You see, only today we have posted new course notes
If you have December 2012 opentuition notes, example is there
Question is now below the lecture. enjoy
Merci beaucoup
it says surver not found so not able to listen the lecture. pls help me.
thank you
Your pc / network is behind a firewall contact your Internet provider for help
would any one tell me why A company records dividends recievable from D company as RE but NCI does not?
thanks a lot.
@loveg918, yes, the dividend is an appropriation of profit after tax. In our calculations of W4b we give the nci their share of profit after tax and that amount INCLUDES the dividends which are attributable to the nci.
You say the parent company records their share within retained earnings in W3. that is correct. The figure at the end of W3 in the subsidiary column is post acquisition retained profit ( ie after the proposed dividend ). If you check the resulting Statement of Financial Position, you should find an amount in current liabilities representing the nci’s share of the subsidiary’s dividend. So for W4a they get their share of post-acquisition retained and for the Statement of Financial Position the nci from W4a is shown in Equity and their dividend is shown as a current liability
will u upload lectures solving past exam questions..?Mike i wanna have christmas dinner now!!!(no matter its Christmas or not)
@rooman, I’ve nothing planned but I MAY have a couple of free days late on next month so we’ll see…. but don’t hold your breath
It means we value nci at full value where the value is given to us as 87,667!
As per the solution in the lectures;
Goodwill is 68,334
Impaired 25% = 17,084
Goodwill Impairment:
Group Share: 17,084 * 72% = 12,300
NCI: 17,084 * 28% = 4,784
There is a difference in goodwill as well as impairment if calculated together and calculated separately.
Please guide.
@zainy52, Ah! But we don’t calculate goodwill for the parent and for the nci as two separate exercises. I USED to, but Steve Scott (F7) and Graham Holt (P2) seem to insist that goodwill is calculated in a single calculation, so I have had to change my layout for Working 2
. If the nci is valued on a full value basis, then they are charged with their share of goodwill even though that impairment may exceed the apparent goodwill attributable to them using two separate columns.
Is that clear?
@MikeLittle,
Thank you for the quick response.
I was referring back to my F7 BPP notes (Exams in 2010). One of Exams focus point states:
“The option to value NCI at fair value in introduced and revised IFRS 3, but it is just an option. Companies can choose to adopt it or to continue to value NCI at share of net assets. In the exam, unless you are directed to apply the fair value option, you should value NCI at share of net assets. It is likely that the examiner will specifically tell you this. If you are required to use the fair value option, the examiner has stated that there are three possible options:
1) You may be given the share price of the subsidiary just before acquisition
2) You may be told that the NCI is value at certain amount
3) You may be given the amount of goodwill attributable to the NCI. In this case you would calculate goodwill & NCI under the traditional method and then add the goodwill to both of them.”
I am wondering if option 2 “You may be told that the NCI is value at certain amount” is valid here since the question says:
The directors values the NCI at $87,667 at date of acquisition.
@zainy52,
*The option to value NCI at fair value in introduced by the revised IFRS 3
@zainy52, Hi, yes, the question specifically tells you what the value of the nci is at date of acquisition
@MikeLittle, It means we need to calculate goodwill separately for Group and NCI (Fair value option).
Hello,
This has reference to Example1, Chapter1 regarding goodwill and impairment of goodwill calculation.
If I calculate goodwill for group and NCI separately I get Group Goodwill 56,080 and NCI 12,254.
Group 250,000 less (269,333 * 72%) = 56,080
NCI 87,667 less (269,333 * 28) = 12,254
Total remains same as per the video lectures = 68,334
Impairment 56,080 * 25% = 14,020
NCI 12,254 * 25% = 3064
Again, Total remains same as per the video lectures = 17,084
This gives overall goodwill 51,250 again same as video lectures. The change is reflected in NCI and Retained earnings
NCI = 78,910
R/E = 169,040
Can you please guide
@zainy52, What’s your question?
Any one with p2 study text in soft copy, please
This has been very helpful. Thank you very much!
thanks Mike for re-doing it , your my FAV teacher here
looks like Mike isn’t so happy about the amendments you guys made him do in his concepts…
Where can I get the question the solution is being provided in this demonstration?
@stevonso, course notes
lecture starts and then stops after 5 seconds…this happens with the framework lecture too….:(
You may have slow Internet connection
Good , but can see only what the lecture write on the screen but cannot hear what he says.