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sir i didn,t understand the working number 2 in question no 1 in june 2014 past paper …..why 95 was multiplied and divided by 8%/60%…i am so confused in this…thanks in advance sir
Hi,
If the 60% originally held was equivalent to 60% then to work out the value of the 8% holding that we’ve sold we need to divide the original value by 60% to work out how much each 1% is worth and then multiply by 8.
The reason we’re doing this in the first place is to work out the gain on disposal of the investment, so we’re comparing the proceeds of $18 million to the value of what was disposed.
Hope this clears up any confusion.
Thanks
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