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Hi Mike
I have a couple questions regarding this Ashanti question… firstly it threw me i found it rather difficult at first but getting my head around all the information is my challenge!!!
My questions are as follows;
1. Why do they put the fair value adjustment for the plant of £2000 to admin costs would this not be added to COS as deprn?
2. Also in admin exp they also include the revaluation figure from the PPE why is this?
3. Why when calculating the employee benefits- holiday entitlement do they calculate total days worked by the total workers of 900 and not by the employees who remain in the company… as the question states that 5% of employees will be leaving without holiday pay?
and lastly when calculating the associates profits and comp income we use the share that the subsidiary has in it and not the group share is this correct? (what i mean is we calculate the TNCI as 44% but we only take 30% of the associates profit!)
Many thank
JemmaHi Jemma, sorry for the long delay!
1) “Why do they put the fair value adjustment for the plant of £2000 to admin costs” – I presume that you are referring to the depreciation on the $10m revaluation increase on acquisition. I don’t know! It would have been my inclination to increase cost of sales but maybe I’m missing something
2) “Also in admin exp they also include the revaluation figure from the PPE why is this?” If I’m understanding your question correctly, you’ll find the answer to that query in the examiner’s answer working 6
3) In the examiner’s answer working 7 you’ll see this line:
“900 x 3 days x 95% = 2,565 days”
The “x 95%” accounts for the anticipated leavers of 5%
Lastly) At the end of working 3 in the examiner’s answer, you’ll see:
“Gain on disposal to pro?t or loss 3·8
The gain above has been calculated from Bochem’s viewpoint and therefore a portion of this gain belongs to the NCI of Bochem.”
I believe that that answers your query but, if not, then post again
Hi Mike
I have just looked over this and come across a few queries i am confused about, firstly i cannot seem to get the Employee holiday pay right,
900 x 95% = 855employees x 3/255 working days x salary of £19million = 0.2
but i keep getting 191.12, can you please help me?
thanks
JemmaI also have a question about the share of profit on assoc.
In arriving at the profit for the year and TCI for the year that is attributable to NCI, as in the suggested solution, we include the share of assoc profit in the calculation of Profit n TCI attributable to NCI because there’s NCI portion since Bochem who acquire Ceram, not Ashanti. Am i right?
If the question change, and Ashanti who acquire Ceram, not Bochem, then this part of share of assoc profit wouldnt appear in the computation of profit n tci attributable to nci?
And can i use short form like “NCI” “TCI” “RE”.
And do we really need to write the full name of the IAS. For example “IAS 24 Related party disclosure states that…” or “IAS 24 states that…” is enough
“And can i use short form like “NCI” “TCI” “RE”.”
Of course you can! What’s the exam about? Seeing whether you can write “Non-controlling interest”?
“And do we really need to write the full name of the IAS. For example “IAS 24 Related party disclosure states that…” or “IAS 24 states that…” is enough”
See my comment above!
Re the share of associate’s profits, yes, you’re correct. If it had been Ashanti that had acquired Ceram, then the nci in Bochem would have had no interest in the Ceram results
Hello
I know this post is somewhat old but the Ashanti question continues to challenge students every year so regarding the question put forward on June 7, 2014 at 7:48 pm above where 191.12 is the queried answer, it should be as follows:
3/255 working days x salary of £19 million = 0.2235 mil
This amount is then multiplied by 855/900, which is 95% since the annual salary of 19mil was for all 900 employees (100%)
=0.2235 mil x 855/900 = 0.2123 mil ~0.2 mil
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