Group SFP – Deferred consideration – ACCA Financial Reporting (FR)
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Hello sir, please how will be the unwinding done if the reporting date was 31st December 20X6. I mean how much will be credited to contingent liability and debited to finance cost in Dec, 20X6.Thanks
Will the adjustment impact our Net Asset in ‘working 2’? And is this a intra company liability?
sr what is meant by unwinding of discount
It is a process of increasing the value of a liability from its present value to its terminal/settlement value, i.e. what we are expected to pay in the future.
Hi,
The question only asked us to calculate the goodwill, which has been done. The inclusion of the journal for the deferred consideration was done for demonstration purposes only. We would need to record the issue of the P shares too in the books of the parent.
Thanks
i am baffled at the journal entry . you debited investment with the deferred consideration only. why didnt you debit investment with the value of the shares plus the present value of the deferred consideration?
Please explain.
my journal entries were DR investment 53840, CR share capital 16m, CR share premium 16m and CR deferred consideration 21840
Well, he didn’t because he just showed the journal in the above example. Technically you are right.
Yes. So if you rewind from where he passed the journal (Dr Investment; Cr Deferred consideration), he said that the question does not ask us to do that. So basically he was trying to show further what we would do if we have a deferred consideration which has been discounted to PV, and how we unwind the discount as at year end.