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For september/december 2015 exam, regarding transaction (ii) and (v) on equity investment.
For stretcher,
• Comparing value at start of year to value at acquisition dateGain on investment 1000
(7000-6000)SOFP : +1000 to fair value of net assets table
SOPL : + NCI% of 1000 to NCI(SOPL)• Comparing value at acquisition date and value at year end
Gain on investment 900
(7900-7000)SOFP: + 900 to fair value of net assets table
SOPL: + NCI% of 900 to NCI(SOPL)Though we are not asked for the consolidated statement of profit or loss (SOPL), i just want to make sure my understanding is correct. Is my adjustments to the SOPL correct sir ?
Regarding transaction (iv)
I thought that the $800 000 is actually ‘invoices in transit’ but looks like it’s accounted for as ‘goods in transit’ in the answer key.It’s confusing.How to differentiate between this two ?
Fair value of subsidiary net assets at date of acquisition increases by $1,000 so goodwill decreases by that amount
There is no implication for the nci because they are valued based on share price (in this example)
A further $900 gain (post-acquisition) will be shared in respective proportions by the parent and the nci
Put the fair value adjustment through the Stretcher retained earnings and then take our share (working W3) and nci share (working W5A)
“Palistar processed the sale of $800,000 of goods to Stretcher, which Stretcher did not account for until their receipt on 2 July 2015”
“… THEIR receipt on 2 July 2015”
“… THEIR …”
Plural
To process a sale means to raise all necessary paper work and to despatch the goods and THEY WERE (not IT WAS) not received until …
OK?
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