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  4. Sir, the Exp 3. The fair value $9k was added back to the combined non-current asset. How we know the $27k of Non-Current asset of S for the year end was not been adjusted to factor in this $9k?

    • Sorry – I must remove them.
      What happened is that we used to have test questions at the end of each chapter.
      These have now been removed from the notes and instead we have online practice tests on each chapter that you can find linked from the main Paper F3 page.

  7. Dear John,

    Thank you for all you do! I apreciate your time with students. I have two comments:

    a. I cant access the notes? Are they uploaded.

    b. I am trying to understand the Group accounts concepts properly. They way i understand my accounting is really through the one and only rule (A = L+SE). So whatever happens on the asset side has to net off what happens in the SE + L side. Now, normally if i add up a all the P and S captions on the balance sheet it will all balance nicely. However, i dont add up the share capital of S right, So if the 60 consideration disapears and a 26 goodwill shows up,then it has reduced my Assets by 34. Where is the corresponding 34 dissapearing from the (L + SE) side? I know the 9 fair value netsoff nicely as you added it to the Asset side and also SE side, so really the Asset side went down by 25 which corresponds to the S share capital. So then, where does the 13 difference (S retained earnings post aquisition – S retained earnings pre acqisition) correspond in the Asset side. Please help maybe because i cant ccess the notes and missing something but for the life of me I CANT FIGURE OUT HOW THE BALANCE SHET BALANCES with a 13 leg on one side and no corresponding 13 on the asset side. Please explain in the easiest way i can understand which is plus/minus in the accounting equation.

    Thank you John!!

    • Of course they are uploaded!! The link to download them is above the lecture. (If you have problems downloading or viewing them then you should ask in the support forum – the link is above)

      I am sorry but I really cannot follow all your abbreviations, and you really cannot spend time applying the accounting equation when it comes to consolidations.
      Please download the notes and watch the lectures again with the examples in front of you. Everything you need on consolidations is covered in this and the following lectures and should make more sense to you when you have the notes.

  9. helooo sir, thank you so much how easily you explain goodwill and retaind earning seriously i already have issue in english language but understand your lecture easily thank you so much respect alot

  11. Hi Good Day say I’d just like to ask something? Where you said that less likely or possibly the ask you to find out the goodwill and there’s a fair value adjustment which is more, can it be where the fair value adjustment can be where it is less? Or does it always be more?

  12. Hey john,
    I am bit confused with terminology. Why did you call them retain earning instead share premium or Capital reserve. Because in revenue reserve we keep retain earming from actual profit and also we may not distribute the Capital reserve. If you put them in same account how will we distinguish between them. Thanks

    • I assume that you have the Lecture Notes in front of you when you are watching the lecture, because in the question the figures given are for retained earnings and therefore they cannot be capital reserves.

  13. Good day John, firstly I want to thank you for these great lectures. I jus have one question for clarification if you dont mind. @ 7.49 in this recording am I looking at the balance sheet value of the subsidiary S or Parent P?

  14. Good Night Sir.
    In question 4 where they asked for retained earnings isn’t the $14400 supposed to be added to the $48000 for Z? The most appropriate answer there is $216,000 that is just A’s earning for $168,000 and Z’s for $48,000. Could you explain for me please?

    Thanks
    That’s in the Test question.

    • The consolidated retained earnings are those of the parent (168,000) plus the parents share of the post-acquisition earnings of the subsidiary (100% x (48,000 – 14,400) = 33,600)

      I do deal with this in the lecture, and I do suggest that you watch it again.

      • Thank you very much!! I watched it again and realized it was a mistake on my part.

        Thanks a lot!!!

  15. Just an FYI… On the test the extract used for the questions, says : P acquired 100% of the share capital of Q… but the accounts refer to P & Z… Not a big issue but just wanted to point it out. 🙂

  17. Mr Moffat thank you very much indeed for these lectures. They are very helpful and I already passed my f2 exam by a margin thanks to your lectures.

    If I could make a suggestion, is it possible to add number of minutes next to subsection names, so we could plan our time on these lectures, i.e. how much time we would have to spend going through a particular sub section of a chapter.

    Many, many thanks.

  19. Dear sir,

    When you calculate goodwill, why is the share capital of S, retained earnings and extra fair value on NCA the net assets of S? Why is the NCA, CA and CL not considered?

    Really confused about this, hope you will enlighten me!

    Lastly, the calculation of retained earnings, why is the company P not entitled to the retained profits of $6000 (pre-acquisition profits) when they acquired company S? \

    Many thanks!

    • The definition of net assets is non-current assets + current assets – current liabilities – non-current liabilities. The net assets are always equal to the total capital i.e. share capital plus reserves (in this case retained earnings).

      Company P is entitled to their share of pre-acquisition profits – that was part of the reason for the amount that they paid for their shares. The net assets at the date of acquisition would be equal to the total capital at the date of acquisition – i.e. share capital plus retained earnings at the date of acquisition.

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