Associate and sale

Hi Mike,

Hope your rainy bank holiday is going well and you are still in joy over the T20 game. Was a good game indeed!! I thought if Afridi stayed in he could have turned it around.

Right Mike- Tom clendon has been very helpful in providing a mock question for the p2 sept exam. It has slightly baffled me. I can see a loss of influence. I can also see a change in fv. Not sure how to go about this.

– Is this now a simple investment?
-Consolidate up to date of disposal – so I will time apportion it 6/12?
-Will include dividend income post disposal and group gain on disposal?
– Also use of proforma- so loss on disposal- proceeds + fv of retained interest MINUS the CV of associate at disposal, Good will, net assests and proportion of na? obviouslyI will not calculate the tax as the question states ignore DT

Section B – Attempt two of the three questions
Q2 Germany

Germany has a reporting date of 31 December 2014.
As at 1st January 2014 Germany held a 40% shareholding in West. This investment was correctly accounted for as an associate and in the Germany group accounts at that date had a carrying value of $40 million.

On 1st July 2014 Germany sold a 25% holding in West for $50 million thus reducing its investment to a 15% holding and as a result Germany no longer exercised significant influence over West. The fair value of the 15% holding at 1st July 2014 was $30 million and was $32 million at 31st December 2014.

Extracts from the statement of comprehensive income of West for the year-ended 31st December 2014:

$ million
Profit after tax 24

Other comprehensive income 12
Revaluation gains

Total comprehensive income
36

All profits and gains accrued evenly over the accounting period. On 1st March 2014 West made a distribution of profits (paid a dividend) of $10 million. Ignore deferred tax.

Just confused on how to account for this and the layout