Example 11 Ch 7 pp 46

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    wgk
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    Would the following be correct?

    Revaluation Reserve
    Inventory – 0
    NDNCA – 15,000
    DNCA – 18,000
    pre. acq – (65,000)
    post acq – (32,000)

    CSoFP @ 31/12/09
    Share Capital – 200,000
    Cons’l Ret. Earnings – 416,000
    NCI SoFP – 88,500
    Reval. Reserve (32,000)
    Shareholders Funds – 672,500
    Liabilities – 110,000
    Total Net Assets – 782,500


    Avatar of MikeLittle
    MikeLittle
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    Is that the same as the printed solution? If it is, then it’s ok!


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    wgk
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    No it’s not exactly – but the bottom line answer is the same. Instead I have ventured to do a Revaluation Reserve calculation to be included in the CSoFP – but my number is negative (32,000). Can one have a negative Revaluation Reserve number in the CSoFP? I know you said not to pursue this route, but I would be very interested if my approach is correct!!


    Avatar of MikeLittle
    MikeLittle
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    No, you cannot have a negative revaluation reserve! What would you do with it? Depreciate it?


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    wgk
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    Ok, so u r saying my approach is incorrect? – hands up So how do i then aim for the global prize when it comes to revaluation reserve!! :) Actually i am not worried about the global prize, but very interested in how to deal with the revaluation reserve! Any tip/hint to set me on my way?!?


    Avatar of MikeLittle
    MikeLittle
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    I don’t see where your 32,000 has come from. And is it negative?


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    wgk
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    Revaluation Reserve

    Inventory (all used) – 0
    NDNCA – 15,000
    DNCA (30-6-6) – 18,000
    Total – 33,000
    -Pre acq. – (65,000)
    therefore post acq. revaluation reserve – (32,000)


    Avatar of MikeLittle
    MikeLittle
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    Ah!!! No, no, no. Have you followed the video which explains it?


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    wgk
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    Are you referring to the video w.r.t this question? If so, then I have missed the point somewhere along the way. I have currently watched all video w.r.t. chapters 1-8.


    Avatar of MikeLittle
    MikeLittle
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    OK, don’t even think about opening a revaluation reserve. Put all your fair value adjustments through Retained Earnings.

    Now try the question again

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