In this question, how is it that the post acquisition profit was not prorated? From the question exactly 1760-1940 * 9/12 should have been the post acquisition R.E..

The fair value at acquisition is the uplift of $2.4 million on the PPE(building). In the post acquisition period this will need to be depreciated over 8 years, so $2.4m/8years = $0.3m per annum. The acquisition date is 31 August 2014 and the reporting date 31 December 2014, so we need 4 months of depreciation as $0.1m ($0.3m x 4/12, or $0.3m/3, being the one third of the year).

I believe there is a typo in the question where it says that goodwill is to be impaired by $20. What they meant is $20,000 NCI is: NCI at acquisition Plus: post acquisition share of earnings Less: NCI share of goodwill impairment (in the questions NC% is 25% hence why 25% of $20,000 needs to be deducted from the value of NCI)

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accountant-@100 says

In this question, how is it that the post acquisition profit was not prorated?

From the question exactly 1760-1940 * 9/12 should have been the post acquisition R.E..

jbemmy says

Please explain how the NCI Share of 1,200000 is gotten

keyroh says

Hi, in Q2, Should it say £1,780,000 rather than £1,760,000? The rest of the answer is calculated as if this were the case.

taqi1 says

Sir,

Could you please let me know where that 20,000(to calculate Impairment) came from in Q# 3?

tusharregmi says

Pleas explain how does that 20000 comes up in question number 3

tds11 says

In question 1, can you please explain how you calculate the initial 1’200’000? (I guess it’s the number of shares)

Thank you in advance

irakoze says

I also think it could be 4M shares @50 cents instead of 2M shares @ 50 cents, cause of 30%NCI Shares of 1,200,000

gorikrish says

Normally , the fair value of NCI is given in the question.Is there any other way in which NCI value will be asked like the one in q.1?

gorikrish says

in question 1, can you please explain the fair value adjustment calculation ?

P2-D2 says

Hi,

The fair value at acquisition is the uplift of $2.4 million on the PPE(building). In the post acquisition period this will need to be depreciated over 8 years, so $2.4m/8years = $0.3m per annum. The acquisition date is 31 August 2014 and the reporting date 31 December 2014, so we need 4 months of depreciation as $0.1m ($0.3m x 4/12, or $0.3m/3, being the one third of the year).

Hope that clears it up.

Thanks

gorikrish says

Thank you!

hodge says

Hi there,

Please can you explain for Question 3 where the 20,000 that is multiplied by 25% comes from?

juku23 says

Hi,

I believe there is a typo in the question where it says that goodwill is to be impaired by $20. What they meant is $20,000

NCI is:

NCI at acquisition

Plus:

post acquisition share of earnings

Less:

NCI share of goodwill impairment (in the questions NC% is 25% hence why 25% of $20,000 needs to be deducted from the value of NCI)