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More Complex Group Structures Example 3
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Dear Mike I am confused in respect to M vs V!
In the last example you did it another way and I did this one the same way. Can you please point out what did I go wrong here??
M in V
COI (80000*80%) 64000
Value of NCI inv (61360*12% ie. our Nci) 14160
78160
FV of SNA at DOA
SC 70000
RE + Profit of 1 year 48000
118000
M’s share 118000*60%*80% (56640)
21520
– Impairment @ 10% (2152)
Goodwill 19368
@farazhotiana, Hi
I think it’s probably because, in M and V, the value of the 52% nci was given whereas in the earlier examples only the direct value of the nci was given
With respect to w2 and w3 / (M vs V): I am confused by the rational of the goodwill split. If we had not the information on the NCI, the total goodwill would be attributed to the parent (full 736), which would also be consistent to the approach in the previous example.
Now, as we know the FV of the NCI and use it in w2, we do split the goodwill and in w3 its impairment to the NCI and the parent. However, 52% of the NA @DOA (52% of 118,000 = 61,360) are exactly the FV of the NCI. Why is there anyway some goodwill and Impairment attributed to the NCI, although there is no difference in the NCI and NA valuation? Many thanks for your answer and help.
@ojss, Woah! I’ll need to look at that. I’ll get back to you in the next few days. If I haven’t done so by Monday, post again please, and remind me
Sir, waiting for your reply of @ojss post …….
thanks mike for helping me out understanding it . I was really tensed since 3 days i was hearing your EACH word of video very carefully so that i get clue out of it…i m relaxed now uptill complext structure…
one thing i want to know more…we deducted it from any of subsidary or sub subsidary..but fundamentally it should be deducted from which area subsidary or sub subsidary.?? and if it is sub subsidary….then let me know generally!!….when user of financial statements sees it and find that investment of NCI is 40% but under this account its allocated 52% profit ….dont you think it wont present fair picture????
@syedwaqar, Hi
It should be deducted in the nci calculation of the subsidiary!
hi mike….
yeah your correct about w 4b that for soci ……
actually i am little confused….i saw this video lecture and then i saw video lecture of example 4 part b…….
in example 3 you deducted indirect investment 20% of 60 from vitalis NCI which is sub subsidary……BUT when i saw video lecture of example 4 part b…..u deducted indirect investment from….kristina which is subsidary…..
please dont mind…i am asking too much from you same thing again and again
@syedwaqar, You know – you’re correct! I need to amend one of them so that the answers are consistent.
However, if you think about it, it really doesn’t matter for the Consolidated Statement of Financial Position where we deduct the ( 20% x $80,000 ) $16,000.
We can deduct from the nci in Dimitri or from the nci in Matis. In either situation, the nci will have $16,000 deducted representing their share of the cost of the investment by the subsidiary in the sub-subsidiary.
Sorry that that inconsistency has arisen, but thank you for pointing it out
@ Mike …
Correct me if i am wrong!!
We are deducting 20% of 60%(80000*20%=16000) in w4b because …….16000 is already in w4a value of investment “23000”
Regards
@syedwaqar, Why are you looking at W4B? That’s the working to calculate the nci’s share of this year’s subsidiary retained earnings but the question is asking only for the Consolidated Statement of Financial Position.
The calculation for W4A is:
nci’s value as given in the question, less
nci’s share of the cost of the investment by the subsidiary in the sub-subsidiary, plus
nci’s share ( 52% ) of the sub-subsidiary’s post-acquisition retained earnings, less
nci’s share of the impairment of the sub-subsidiary’s goodwill ( if valued on a fair value basis )
Sorry for late reply sir…i was stuck studying other acca papers
its harder for me to understand……if we are ducting 20% OF 60% from NCI investment….so NCI investment left at 40% thennnn…
for investment of 40 % in a company…..should investor get 52% share of post acquistion profits???? its really hard for me to understand …..
sorry again for being late
@syedwaqar, NOOOO!!! 20% of 60% is 12 ( and not 20! ). That’s the value of the indirect non-controlling interest. Add that to the 40% direct non-controlling interest and you arrive at 52% total non-controlling interest
Better?
Hi!
I want to know about working 4b…..if we are deucting 20% of 60% from investment of NCI …so that investment gets to 40% ….then why we are giving extra 20% of 60% out of profits for investment of 40% ….for 40% investment we are giving 52% profit
@syedwaqar, Is it because 20% of 60% is 12, and 60 – 12 = 48%?
Hello Sir. Can that share of 20 % deducted in NCI calculation of Vitalis can alternatively be deducted from NCI calculations of Dimitrys instead of Vitalis as my teacher taught me that way. Kindly guide me please. Thank you.
@hamzahmoazzam, I’m sure it could, particularly if that’s the way your tutor tackles it.
I can’ t watch video from chapter 6. What may be the cause.
Very good lecture. Keep it up open tuition.
why is it that the fair value of net assets when clculating goodwill is not multiplied by 80% and 60% as with previous examples?
@pocher, In the previous examples we didn’t have the value of the NCI. In this example, it is stated at $61,360 and so the full value of the fair value of net assets at the date of acquisition should be used.
We remove 20% of 80,000 bse it’s INCI that’s already got a share, but we calculate 52% of 48,000 bse? Seems like dissimilar treatment to me, correct me pse.
lecture should work fine, maybe your flash plugin has crashed, restart PC or try another browser
I am sorry,but I wonder why this vidio is not available in China mainland any more?