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Hello !
I use Kaplan texts, which uses a standard set of workings. However, I am confused about working 2, which is Net Assets of S.
@Acqn.
@Rep.
Share Capital
8,000
8000
Ret. Earnings
16,500
???
FV Adj.:
Factory
2,000
2000
Depn.
NIL
(100)
Software
(500)
???Net Assets
26,000
23,600I know the net assets @reporting are 23,600 but i dont know the figures with question mark or any missing figure or any wrong figure i have put in, if any.
Please help on that one.
Thank you
Hi – the 500 software is a fair value adjustment – it was decided to have no value and was written off shortly after acquisition. Therefore, as at reporting date, there is no amount to be shown for the software.
If net assets are 23,600 and share capital is 8,000 ( and no other reserves? ) then retained earnings must be 15,600 ie 23,600 less share capital
It’s an F3 fact of life – net assets = shareholders’ funds
Hi Werty !!
Thanks for your reply…I know the equation but I meant to ask that how the retained earnings would be calculated (under that performa – kaplan). The asnwer 23,600 I did it through reverse engineering (reverse calculation)…thats fine, but the concept is not clear.
In the exam answer, the examiner has also adjusted the impariment of goodwill in consolidated retained earnings whereas in other questions he does not do that.
So all i am asking is the calculation of net assets at reporting date using taht performa.
Thanks
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