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Hi Mike,
Could you please look at the Q1 of Dec. 2011- Traveler, question paper item 2 “The consideration comprised cash of $477m and the transfer of non-deprn land with a F.V. of $64m. The C.V. of the land at the acquisition date was $56m. At year end, this asset in Traveler’s a.c., the sale proceeds had been credited to P&L.
Maybe my Q is too stupid, but just confused the land is transferred from Parent to subsi or verse? Why not removing the gain of 8m which should be intra-group transaction profit.
Thanks,
QinIt’s a strange one indeed! Part of the purchase consideration paid in acquiring control of Captive was the transfer of the land. The person to whom this was transferred is simply a former shareholder of Captive. It’s not therefore an intra-group asset transfer. Look at it this way – instead of paying cash to buy a load of shares from a substantial shareholder, Traveler persuaded this big shareholder to accept a parcel of land.
Does that make it easier?
Okay, totally understand now. The transfer is btw Traveler and Captive’s former shareholder. :). Thanks.
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