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Hi,
I have a question on consolidation, but I’m having a problem calculating the consolidated reserves, which according to the answer should be $13,156, can someone please help me by showing me the workings to get to that figure, I’ve uploaded the question to media fire, because I cant find the attach file button.
Thanks!
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The $13,156 was made as below:
$14,000 (Penn’s reserve)
+ $800 (4/5 sharing of reserve at Speen)
– $1,200 (4/5 sharing of pre-acquisition profits at Speen)
– $160 (4/5 sharing of URP at Speen)
– $444 (Goodwill impairment)
+ $160 (40% sharing of post-acquisition profits of Amersham)Remarks:
Goodwill at acquisition of Speen: $7,500 – ($5,000 + $1,500 + $1,115 – $920) x 4/5
URP at Speen: $1,000 x (1 – 1/1.25)Awesome, this bit was driving me mad, thanks once again sosologos for taking the time to help me out, much appreciated!
Just one more question, what’s the reason for not including the fair value adjustment of land in the calculation? (920 > 1115)
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Fair value adjustment affects goodwill at acquisition. You can see that the $1,115 – $920 in the goodwill remark is to count in the fair value adjustment. In other words, fail value adjustment at acquisition, similar to pre-acquisition profits, will not affect group retained earning.
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