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F7 Chapter 7 Questions

VIVA

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  2. Hello,
    I’ve got a question regarding Q1.
    Could you please tell me what will be the amount of the fair value adj building, which will be included in ‘acquisition net assets’ and ‘SOFP date net assets’ calculation?
    Value of net assets at acquisition will be increased by 8/12 of the 1 year depreciation value and value of net assets at SOFP date should be increased by 4/12 of building depreciation value?

    • +$2,400,000 and

      +$2,300,000

      At date of acquisition the building has a fair value of $2,400,000 greater than its carrying value

      4 months later, that fair value increase is reduced by 4 months’ depreciation

      $2,400,000 depreciated over 8 years calculates out to $300,000 depreciation each year

      For the 4 month period between acquisition and the financial year end, the appropriate depreciation is $300,000 / 12 * 4 and that comes to $100,000

      OK?

  3. Hi Sir,

    I am confused by question 7, which said the fair value of land in Nancy is lower than its carrying value for ?20,000; and when we calculate the nci, why we don’t need to add it back? I know, if say the fair value of land is exceeded its carrying value for ?20,000, then we definitely need to make fair value adjustment. I am just a bit confused.

    Would really appreciate your help.

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