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- This topic has 10 replies, 2 voices, and was last updated 8 years ago by MikeLittle.
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- May 14, 2015 at 1:41 pm #245933
Dear Mr Mike, on the BPP practice and revision kit (up to June 2015)question 37, when calculating good will, the answer shown that the net assets on DOA included sentinel’s share 160,000 , other equity reserve 2200 and retained earnings 125,000 which are shown on 1 April 2000. my question is that why it didn’t add 66600×6/12? because the acquisition day is 1October 2000.
many thanksMay 14, 2015 at 5:17 pm #245978I don’t have the BPP revision kit 🙁
Can you give me ALL the relevant information – then I can give you an explanation
Thanks
May 14, 2015 at 7:49 pm #246005thanks a lot for your response, this question is past paper June 2011.
many thanksMay 14, 2015 at 7:51 pm #246006that past paper didn’t require calculate good will, the practice kit required and information which was past paper is the same as practice kit, help me please!
thanks a lotMay 14, 2015 at 11:18 pm #246027What does BPP say for goodwill? Is it 100,000?
May 15, 2015 at 10:02 am #246090thank you for your asking, that question is ACCA f7 past paper June 2011, namely Prodigal.
On 1 October 2000 Prodigal purchased 75% of the equity shares in Sentinel. the acquisition was through a share exchange of two shares in Prodigal for every three shares in Sentinel. the stock market price of Prodigal’s shares at 1 October 2000 was 4 per share.
the following information for the equity of the companies at 1 April 2000(ie before the share exchange took place) is available:
Prodigal Sentinel ($000)
equity share of $1 each 250,000 160,000
share premium 100,000 nil
revaluation reserve(land) 8,400 nil
other equity reserve 3,200 2,200
retained earnings 90,000 125,000
the answer shown that when calculating the good will , the net assets on DOA : sentinel’s share 160,000 +equity reserve 2200 +retained earnings 125,000 which are shown on 1 April 2000’s statement, my question is that why it didn’t add 66600×6/12? because the acquisition day is 1October 2000. hopefully I described clearly.
many thanksMay 15, 2015 at 3:37 pm #246172I think that it should be 66,000 x 6/12 because the OCI adjustments were post-acquisition
I asked you what does BPP say for goodwill but you didn’t answer me 🙁
May 24, 2015 at 9:04 pm #248646Sorry for response too late, the BPP answer is that:
consideration(((160,000×75%)x2/3)x$4) 320,000
Fair value of non-controlling interest 100,000
fair value of net asset:
shares 160,000
other equity reserve 2,200
retained earnings 125,000
good will 132,800
I am very confused
many thanksMay 24, 2015 at 10:58 pm #248696I’m still getting goodwill to be 99,500 (not 100,000 as per my earlier post)
Pity that the ACCA didn’t include the working even though it wasn’t asked for 🙁
May 25, 2015 at 11:02 am #248796thank you Sir
May 25, 2015 at 3:14 pm #248824You’re welcome
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