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    • Profile photo of MikeLittle says

      We know the value of Malfoy’s assets at date of acquisition (given in the question), we know the cost of acquisition by Grainger, we know the value of the nci at date of acquisition. Are we not able to calculate the value of the goodwill?

    • Profile photo of MikeLittle says

      Both Potter and Weasley are suppliers and their personal accounts are included within the payables ledger. The accounting entry in their accounts will, probably in practice, be a memorandum entry. The double entry will be Dr purchases Cr payables ledger control account

      (As I write this I’m thinking that these two (P and W) were customers (I dont have the course notes readily available!) in which case the principle is the same – entries to the personal ledger accounts will be memorandum only. The double entry would be Dr receivables ledger control account Cr revenue)

      Does that explain it for you?

      • avatar says

        sorry I seem to have posted this question on the wrong lecture. It was meant to be for the first part of this lecture.

        I’m confused about what happens when payment is made? I know that payables is debited and cash credited when payment is actually made. But what happens in the potter personal account? and why? for example why is the potter account credited with purchases?

      • Profile photo of MikeLittle says

        Whoah! Why is the Potter account credited with purchases? Because, when we record a purchase transaction the double entry is Dr Purchases Account, Cr Payables (and in memorandum, Cr the individual supplier, in this case Potter)

        The word “Purchases” appears in the Potter personal account on the credit side because the narrative is a cross-reference to the other general ledger account into which the debit entry has been made. In this case, on the debit side of the Purchases Account in the general ledger, we shall find the word “Payables” or, in our simple little example, the word “Potter” where the personal account is taken as part of the double entry

        When payment is made, we shall Dr the Potter Account and Cr Cash Account. Any balance left on the Potter Account is then transferred to the foreign exchange diffence account

        Ok?

  1. Profile photo of questforknowledge says

    hi Mike if i may ask, i dont know if the question in the note is the same as the one you are calculating. in the notes the fair value of the NCI at the date of acquisition has been given. why do you calculate only the parents share of goodwill? why not the total goodwill.
    next question. i am using Kaplan text and i just read that non monetary assets which are carried at cost should be translating at the rate when they were bought. only non monetary assets which are carried at fair value should be translated at the actual rate. why use actual in both situations. i don’t know when the lecture was registered, maybe it was the old standard.
    thank you

  2. avatar says

    Dear Sir,
    Why don’t companies or their auditors calculate Goodwill in FOREIGN CURRENCY at the DOA and then yearly translate and see the Gain/Loss accordingly?

    If we have enough info @ EXAM to calculate Goodwill in foreign currency, is it OK to do so?

  3. Profile photo of c0olmat3 says

    Ey sir,
    you’ve told to translate everything in SOFP at closing rate, in BPP kit ‘Pre acqs’ are translated at closing rate, but ‘post acq’ is translated somehow using beta(B) value. I mean they have beta sign in the rate column..:?
    E.g. Dinar Rate. $m
    Post acq 8 . B 30

    • Profile photo of c0olmat3 says

      @c0olmat3, Oh got it, its the balancing figure, inclusive of Exchange Diffs.
      Well, there are many techniques in translating, all are allowed i guess.
      Either use closing rate(as you did);
      Using balcing figs to dtrmine post acq(bpp);
      Or using avg rate fr post acq(examiner answer).

    • Profile photo of MikeLittle says

      @azzal, I may be wrong because I’m answering this from memory, but isn’t 9,298 the nci’s share of the goodwill impairment? If it isn’t, post again and I’ll look the question up to give you a definitive answer

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