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Dear tutor,
In one of the exam question named ASHANTI, i have observed in examiner solution that gain on disposal of Ceram(Subsidiary’s subsidiary) has been calculated using FV of NCI attributable to Bochem(subsidiary) whereas goodwill attributable to Ashanti has been used. Is this method right? I think that if the goodwill attributable to parent is used then FV of NCI attributable to parent should be there.I believe that, if you follow the logic through, it comes out alright. I’ll probably be looking at that specific question this week, so may be able to give you a fuller answer after then
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Dear Mike,
When you look at this question then please observe and guide me in respect of the following two issues:
1)In the question it is specified that bond is classified as held for sale, even then it is carried at amortized cost. I don’t understand why?
2) In examiner’s answer, future cashflows have been discounted at new market rate, however as per my knowledge, we use original effective rate to discount future cashflows to calculate impairment.
I’ll be waiting for your response. Thank you.Hi – sorry for the delayed response.
BPP have issued an errata document correcting errors in their revision kit. One of the errors affects Ashanti note (iv). The middle line now reads “The bond is held at amortised cost. At 1 May 20X4 the amortised cost of the bond was $21.046 million. The issuer of the bond did pay the interest due on 31 October 20X4 and 30 April 20X5 but was in financial trouble at 30 April 20X5” The rest of the note (iv) stays the same.
In working 5 of the answer ( BPP page 206 ) the top line now reads “First calculate amortised cost using original semi annual effective interest of 4% then compare with impaired value calculated using original annual effective interest of 8%
The impairment loss then works out to be (11.698)
I believe that Admin is going to / has already posted these corrections on the OT site
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Dear Mike,
i am highly thankful to you for this favor.
Please also guide me in respect of entity reorganization. I have understood and done all the working examples of Kaplan Text book of P.2. will that be enough for the topic?
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