| View all free ACCA lectures >> | This P2 lecture is based on OpenTuition course notes, view or download here>> |
[jwplayer file=”mp4:vod/acca.opentuitioncom/p2/p2_ch4c.mp4″ streamer=”rtmp://r.acca.opentuitioncom.netdna-cdn.com/play” provider=”rtmp” image=”https://opentuition.com/acca_lectures.jpg” html5_file=”https://d.acca.opentuitioncom.netdna-cdn.com/play/_definst_/mp4:vod/acca.opentuitioncom/p2/p2_ch4c.mp4/playlist.m3u8″]
A question, please. It’s related to the W3B: the Group is making loss from disposal, why are we still deducting the tax amount of 15?
Because that is the tax that the parent will suffer on the parent’s gain on the sale. Group tax is simply the addition of all the tax suffered by group companies
Ok?
I understand now. THANK YOU.
Hey Mike,
there is a program which is falsing me to download winzip before viewing OT, its blocking me to freely view. just thought i should let you.
I would be really grateful if you could explain why, in calculating the retained earnings figure, we do not do it by consolidating for the whole year, as Liga was sold on 30 June.
As it happens, D’s retained earnings of 600, less D’s loss on disposal of 152.5, plus D’s share of L’s post acq retained earnings of 187.5, equal 635 (the same as in your calculation of D’s retained earnings plus D’s gain on disposal), but it is not clear to me that this must always be the case.
As you can tell, I am in a bit of a muddle…
Because as at the end of the year, Liga is no longer a subsidiary and therefore the group’s retained earnings are the retained earnings of the group!
Many thanks; so this means that we consolidate in the SPLOCI but not in the SOFP?
Correct – because it was a subsidiary at sometime during the year so we consolidate for the period during which it was a subsidiary. But for SoFP, that reflects the situation as at a moment in time – the year end. And, as at the year end, there was no subsidiary!
Great, thanks Mike
Mike Thanks for the explanation, no wonder the SOFP is as at.. it does not matter what happened during the year but is as at the reporting date, the sub status was lost then, we don’t consolidate.
Whereas for the SPLOCI it is for the period ended… meaning we look at the status of the sub through out the period until it lost the status then measure the period and use it to prorate.
i am confused Mike, please help clarify me with this points.
in a previous lecture, gain on disposal was calculated as follows
fair value of the initial investment at disposal less cost to initial investment:
in this lecture it is calculated thus
proceeds from disposal less the carrying value of the initial investment
what is the difference and when do we use which
thank you
If I’m right, the first is where we are moving from an investment in an associate being up-graded to investment in a subsidiary whereas, in the second, we are actually disposing of the investment (as opposed to merely “pretending” that we are disposing)
Clear?
If not, post again
if i understand you well, you are saying that if a company is moving from say a 30 percent holding to a 60 percent holding, the initial 30 percent will be disposed off and the gain will be calculated thus
fair value less cost of the initial 30 percent
but if the company is disposing its shares in a subsidiary
it is calculated as
sale proceeds les carrying value of the shares being disposed off:
am i correct?
another question. is the carrying value in this second situation equal to the fair value at the date of disposal?
is it only my who is shit scared about this P2 exam
Nope, me too! Where you from? I’m sitting this and P7, baffled!
Dig this Miller215, am sitting P2, P6 and P7!!! now thats scary!
and? Did you pass all? any? none?
Is it complete coincidence that working 4a add 4b (162750 and 12250) equal the 175000 paid to nci in society?
nice lecture boss