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Dear Mike,
on 1 Oct 2010 Prodigal purchase 75% of 160 million equity share in sentinel,
for the year ended 31 Mar 2011, Prodigal Sentinel
Other comprehensive income,
Gain on revalu of land 2500 1000
Loss on fair value of equity financial asset (700) (400)equity for company at 1 April 2010,
Other equity reserve 3200 2200
other equity reserve at 31 Mar 2011 is
3200-700-400*6/12*75% , my question is why not add 2200? Is it because it is the reserve before the acquisition? Thanks.Yes! The treatment of “other reserves” is exactly the same as the treatment of Retained Earnings
You must have heard me say this mantra so often that you are probably as sick of it as I am! The treatment of all reserves for the consolidated statement of financial position is:-
H’s own +
H’s share of S POST-ACQ retained –
Goodwill impaired since acquisition (just our share)
In the context of Prodigal, there has been just a reduction in the value of Sentinel’s Equity Financial Asset Investment and that reduction needs to be time apportioned to include only the POST-ACQUISITION movement
OK?
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