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Dear Mike,
First let me thanks for all your support. Your lectures really are helping me a lot!!!
And now the questions:
1) I’m doing consloted RE as per you proforma. Per question Re – Pre Acquisition for RE. My qustion is in particular this past paper there wasn’t given Pre AQ RE. So How can i find it? I thought that i can divide RE per year for post and pre AQ period, but it doesn’t work. In answer it goesh tghrough profit. But for me it’s easier to go by your way of calculation. Please could you help?
2) In anwer calculation of G/W i made myself but I didn’t add post AQ profit. Could you please advise me what it gives me (NA+Post AQ profit) and why logically shoud i add NA?
Sorry i forgot, do you need me to post full question? I have tried but unfortunateely when i was copying the text it was paste non-accurately. And that’s why i i cannot post post it. but if you will need please let mne know i will paste a picture of the question.
Qusetion # 3 “Plastik”
“My qustion is in particular this past paper there wasn’t given Pre AQ RE. So How can i find it?”
Where there is a mid-year acquisition, you’re not likely going to be given a figure for pre-acquisition.
Instead, you will be given the figure for this year’s profits and also you’ll be given the retained earnings figure as at the year end. In this case, the year end figure is 3,500 and this year’s profits are 2,000
therefore there must have been a balance on retained earnings brought forward of 1,500
Now, there’s also 3 months of this year pre-acquisition. So 3/12 of this year’s profits (3/12 x 2,000) is also pre-acquisition giving total pre-acquisition of 2,000
“In anwer calculation of G/W i made myself but I didn’t add post AQ profit. Could you please advise me what it gives me (NA+Post AQ profit) and why logically shoud i add NA?”
When calculating goodwill, we need to compare the acquisition cost with the fair valued net assets as at date of acquisition. Another way of describing “net assets” is to call it “shareholders’ funds” or “shareholders’ equity”
Shareholders’ funds comprise share capital plus reserves and, in this case, that’s 9,000 share capital + the reserves as at date of acquisition + any fair value adjustments
Reserves as at date of acquisition in this case are as I have just explained in the earlier part of this post (2,000) and the fair value adjustment of 4,000 is given in note (i) to the question
Is that better?
Dear Mike,
Thanks a lot!!! Got it now. But I will do question again afer couple of hours. If i have some additional questions, I will come back to you. But hope i will not have questions:)
Thanks a lot for your patience:)
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