# DEC 09 PANDAR SALVA AMBRA

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This topic contains 8 replies, has 6 voices, and was last updated by  explorer179 11 months, 1 week ago.

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• gutsychyk
Participant

how do u calculate retained earnings at the date of acquisition for goodwill – please can anyone solve tht bit for me.

vesela.jana
Participant

RE for Goodwill in Salva:

RE as per question 152 000
post acq. profit 10 500 (6/12×21000) P bought S on 01/04/09 – 6 months period
UPR 1000 (5000in stock x 20%)

163 500 that is how I calculated it

vesela.jana
Participant

Ignore my answer. It is sooooo wrong:-) I checked last night at home.
There is actually nice explanation in the past paree answer

MikeLittle
Keymaster

There is 2,000 loan interest paid by Salva to Pandar. this is 8% on 50,000 for 6 months. This loan interest paid has been deducted in arriving at Salva’s profits for the year, but it is specifically a post-acquisition expense.

So, add back the 2,000 to arrive at a ( pre-loan-interest ) profit for the year. Then take six months as being the profit achieved by Salva for the period before acquisition. The reported profit for the year was 21,000. With the add-back, that becomes 23,000. Halve it gives you 11,500. Add that to the retained earnings brought forward and you arrive at 152,000 + 11,500 = 163,500

Hope that helps

drose
Participant

This is so explicit,thanks.

gutsychyk
Participant

thanks for that. for the same question
I am not getting finance part of comphresive income statement. can you please explain tht bit as well.
in solution its somethin glike
3000-2000 = 1000 x 6/12 + 2000 for salva

renia7
Participant

How do we get a FVA (5,000+20,000) form this task (see answer F7, Pandar group)? I m a bit confused…

explorer179
Participant

-Regarding calculation of goodwill ,why loan interest has something to do with calculation process? i mean it is post acquisition happened after April ,2009

explorer179
Participant

yes but why he added 11500 to calculation process of goodwill

Thank You

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