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- This topic has 3 replies, 2 voices, and was last updated 2 years ago by
Stephen Widberg.
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- September 1, 2022 at 11:54 am #664824
Q)Hand had created on 1 July 2008 a new management entity in which it holds 80% of the
equity share capital with the remainder being held by an employee share ownership trust.
Hand had invested $160,000 in the entity at the reporting date, and Hand had incurred
$400,000 in administrative set?up costs. These costs have been treated as goodwill on
consolidation as the setting up of the new entity constitutes a ‘notional’ acquisition with
the set up costs being included in the cost of acquisition. The shares held by the employee
share ownership trust were issued at a price of $2 per share and are included in the
consolidated statement of financial position of Hand at this amount within current assets.
The share capital of the management entity is 100,000 equity shares of $1.ans Where an ESOP trust holds assets on behalf of
employees, the assets should be recognised as assets of the ‘sponsoring’ entity, i.e.
the property management entity. However, on consolidation this asset must be
eliminated as these shares are those of the subsidiary and not the holding entity
and do not now constitute assets of the group. Therefore, current assets should be
reduced by $40,000 (20,000 shares at $2) and also non?controlling interest by
$40,000 (I CANT UNDERSTAND LAST PART OF THE ANSWER CAN ANY ONE EXPLAIN WHY THEY REDUCE FROM BOTH 40000?)September 1, 2022 at 4:29 pm #664863Which ACCA past exam question is this please? It doesn’t sound like an ACCA question.
September 3, 2022 at 3:53 pm #665043the question ends with ”hand requires advice on accounting for change in group structure”
its not from past paper i found it while i was practicing some questions and i dont know from which book this
September 4, 2022 at 6:31 pm #665139It seems to be way outside ACCA, I think. Cannot help.
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