grange:

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  • November 24, 2011 at 1:44 am #50665
    Avatar of razess
    Anonymous

    I m stuck on the grange question i.e. grange owned 100% interest of sitin on cash consideration $39m. Later, grange sold 60% of sitin at $23m and fair value of remaining shares is now $13m. In the separate financial statement of grange, it recognize remaining interest as $16m (39-23). How profit will be recorded in separate financial statement of grange?

    My answer is : Sales proceed = 23m
    Less:carrying value of investment disposed= (23.4)m
    (39/100*60=23.4)
    Less: changes in fair value of remaining holding=(3)m
    (16-3=3m)
    loss on disposal=(3.4)m
    I think in separate financial statement of grange should recognize $3.4m while calculating impairment of parent itself instead of $3m. i confused why only changes on fair value of remaining interest i.e $3m was included while calculating the impairment of parent(only grange)? please help me.

    November 25, 2011 at 6:26 am #90119
    Avatar of kateker
    kateker
    Participant

    Hello razess,

    (0.4m) is the separate disposal loss
    (3m) is impairment loss
    (6m)is the consolidated disposal loss

    In separate F/S, we need to recognise the first two,
    But in consolidate F/S, we need to recognise the last two in the accounts.
    And the impairment loss can’t be included as disposal loss account.

    This is what i think.

    November 28, 2011 at 7:30 pm #90120
    Avatar of MikeLittle
    MikeLittle
    Keymaster

    I’m inclined to agree with kateker!

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