Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Unwinding discount (Runner Co)
- This topic has 2 replies, 2 voices, and was last updated 3 months ago by Aynur02.
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- August 2, 2024 at 11:10 pm #709106
Sir based on this information which is from kaplan exam kit
On 1 April 20X4, Runner Co acquired 80% of Jogger Co’s equity shares when the retained
earnings of Jogger Co were $19.5m. The consideration consisted of cash of $42.5m paid on
1 April 20X4 and a further cash payment of $21m, deferred until 1 April 20X5. No accounting
entries have been made in respect of the deferred cash payment. Runner Co has a cost of
capital of 8%. The appropriate discount rate is 0.926.(at the year end is 31 March
20X5)I calculate deferred consideration and unwinding discount like this:
Deferred consideration: 21,000 × 0.926= 19,446
Unwinding: 19,446 x 8% = 1552
total current deferred liability: 21,002but in the book, the amount of unwinding is 1556 and find like this way: 21,000 – 19,446
My solution way always give me correct answer and i don’t catch why in here the answer is different
August 9, 2024 at 9:28 pm #709384I think that it will be rounding or that 8% x 19.446 is 1.55568 = 1.556
August 11, 2024 at 11:03 am #709504oh that my bad, sorry, i got it thanks
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