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  2. Please help as per Kaplan NCI is calculated as follows:

    Faire value of NCI + % of Subsidary x Post aquisition profit

    As per this formula there is no F.V of NCI hence as per kaplan it should be 3450..(15000-1200)*25%

    Please clarify this for me.

    Also i wonder for question 3 answer should be B

    • You will be given the fair value of the NCI at the date of acquisition, unless it was acquired on the date of incorporation (i.e. the date that the company was formed).
      If it was acquired on the date of incorporation then the fair value of the NCI is automatically the value of the shares held by the NCI. (This should also explain why the answer to question 3 is A)

  3. hello sir I need to ask a question concerning the mock exams question (36) and (48) asked for the consolidated retain earnings of the group and i got both wrong because i added line by line. I notice both answers refer to the consolidated retain earnings of the controlling interest, am i suppose to always assume thatthis is what they are asking even if it is not written, for i am comfortable with all of the calculations just don’t want to make stupid mistakes. Also can you explain question 47 i don’t know how to get the purchases figure. please keep up the good work and thanks a million

  4. Hi sir I need help here. There is a part of question from BPP as follows
    During the year ended 31 October 20X5 Black (parent) sold goods which originally cost 12million to Bury. Black invoiced Bury at cost plus 40%. Bury still has 30% of these goods in inventory at 31 Oct 20X5.
    May I know how to calculate the unrealised profit?
    Thanks!

    • If they originally cost 12M and there are 30% of them still in inventory, then the original cost was 30% of 12M = 4M.

      However, Black will have invoiced Bury for these goods at cost + 40% and so Bury will be showing them in inventory and the cost to them. Since Black added 40% to the original cost, then unrealised profit will be 40% x 4M = 1.6M

      • Sir is there calculation error in 30% of 12M=4M.. or you have rounded off the figure…???
        Because 30% of 12M= 3.6M

        Does that make a difference??

    • Well if you go through the notes provided on this website… you’ll come to know the formula or format kind of thing for calculation of goodwill arising on consolidation..

      鈥ne way to find it is….
      FV of consideration at date of acquisition
      (Plus) FV of non controlling interest at date of acquisition

      Now you’ll get the ‘total worth’ of the subsidiary ..

      (Less) FV of net assets at date of acquisition:
      Share capital of subsidiary
      Retained earnings(pre-acquisitioned)

      Now diff would be the goodwill on consolidation …

      …
      But if you look in previous example you’ll find an example in which there was a consideration for acquisition was 8000 …and we have checked it that it was equal to the share capital of 8000…

      In this example we have given a consideration of 21600(consideration given to acquire our share in subsidiary)… checking this we’ll find that share capital is 24000 which is more than the consideration paid… it means that this share capital consists of both our and others share in subsidiary ….
      As subtracting our share from this will thus give the others share i.e 24000-21600=2400 (The FV of NCI)

  8. question 1
    does anyone know why in calculation of the goodwill we add a fv (10% of 24000) = 2400 if we are calculating a goodwill in an example where P bought S on the date when S started to exist…

  9. Example 7:

    If question is silent, i should be using proportional value of NCI percentage multiply total of fair value of Subsidiary Net Assets at date of acquisition. ie
    FV of SNA @ DOA
    Share capital $20,000
    Retained Earnings NIL
    Total = $15,000 x 25% = $5,000so, i would get
    Cost of investment $15,000
    FV of NCI $5,000 (per workings above)
    Total$20,000/- am i correct?
    Thank you

  11. Dear Sir, for the first 6 mins of lecture , we only get to hear Mr.John.We are unable to see what he’s writing as the screen doesn’t show. I have read other comments on this video & came to know that many other viewers are experiencing same problem as me .Please resolve this issue.

  19. This is a good, helpful and informative lecture. I really appreciate the efforts put by the lecturer. What I am looking for?
    Some solved Exam Problems with explanation. If it is possible?
    Any thanks again for providing help in studies.

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