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Dear Mr Tutor,
I practiced and also watched the lecture on Q1 June 2015, but now I still cannot understand the note related to Niche disposal.
First, the gain on individual statement of Kutchen of the sale of Niche is 50 (proceed) – 40 (investment at cost). This $10 gain is already in the OCE (as the note says that) of Kutchen (Db Cash 50 Cr Investment 40 Cr OCE 10), then do we need to adjust it when consolidation?
Second, why we do the entry Db OCE/ Cr R/E $10? I mean $10 is the net off (post-acq profit + impairment + loss on disposal), but why this $10 appears on OCE (the question just said the gain on the sale reported on OCE?). This $10 is different with the $10 I mentioned above, right?
Thank you in advance!
Thank wesbyss!
I understand the working for profit/loss on disposal but what makes me confused is I thought this working belongs to consolidation process only. Whereas, the question seems to suggest us that the gain on disposal is a transaction on individual statements of parent.
Now thank to you, I realized that actually we don’t have to make complex workings to get the $10 (P/L on disposal + shares of profit before disposal happens). We just take the proceed less the carrying value of investment on the individual F/S of parent. The result is the SAME. It means that we even don’t need the F/S of subsidiary!
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