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Dear Mike
Q49 Picant
i) there was a software write off rigth after the aquisition of 500 000 usd, my JE was:
debit goodwill balance sheet 500 000
credit nca balance sheet 500 000
there is no retained earnings effect here, still in the solution there was a +500 000 usd effect for Sander in the reatined earnings
ThanksHi
I don’t remember the question but ….
when you say “there was a software write off right after the acquisition …” could you give me all the salient details ….
…. and in whose solution was there a +500,000 usd adjustment in the Sander retained earnings?
Hi Mike
“Sander had an intangible asset of 500 000 usd for software in its balance sheet, parent’s directors the software not recoverable at the date of aquisition, and Sander (subsidary) wrote it off shortly after aquisition”
the solution:
fair value adjustments
aqusition movement year end
(500 000) 500 000 –so in the Retained earning Sander has 500 000 usd
ThanksHi – as at date of acquisition the FV of SNA @ DOA needs to be reduced by 500,000. The directors of Sandar have subsequently actually put through the 500,000 write off so the S Retained Earnings TODAY do reflect the 500,000 write off.
In my W3 I would find Retained Earnings per the question as my top line, followed by adjustments ( but not the 500k ), then deduct the retained earnings as at acquisition date as adjusted for the fair value reduction of 500k.
And that, hopefully, would leave me with the Sandar post acquisition retained earnings
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