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June 20, 2020 at 1:58 pm
I also wanna mention that these lectures are great!
May I ask a question regarding intercompany sales? You said that we will not adjust loss, however when the transaction occured, 5m$ loss means 20m$ revenue – 25 m$ cogs. If we remove the i/c transaction for consolidation, why we do not remove 25m$ cogs?
Thanks so much!
June 11, 2020 at 3:25 pm
What about the goodwill impairment, is there no adjustement?
May 19, 2020 at 1:29 pm
Great. many many thanks.
May 13, 2020 at 12:15 pm
First – Thanks for great lectures! Really appreciate them.
Now, I’ve watched all the group lectures and am working my way through my manual (BBP) and have just done a SPLOCI example, and there’s a revaluation gain in it, and in the answer they have time proportioned the revaluation gain. So – are BPP wrong?? (the example has the figure net of deferred tax, does that make a difference?)
Thanks a million.
December 2, 2019 at 6:38 am
So the 6 million is the total impairment – related to both Parent and Sub?
If it is the total, is there any particular reason as to not split it between the Parent and the Sub across the two columns (4.8 and 1.2 respectively) – or is just a matter of convenience to put the 6 million in the Sub column?
June 30, 2019 at 11:17 pm
sorry could you explain what you mean by an arms length.
April 14, 2019 at 1:19 pm
Thank you for the beautiful Lectures.
I have a question with regard to the sale of goods worth $20M from Parent to Subsidiary
I understand that we are reducing $20M from revenue because the Parents revenue is overstated to that extent.
But I don’t understand why we are reducing $20M from the COS. We do not know when this transaction has taken place and assuming that this transaction has accrued evenly during the year, shouldn’t we reduce $10M ($20M*6/12) from Subsidiary’s COS?
May 24, 2019 at 11:35 am
The assumption is that the goods were sold in the post-acquisition period, so we adjust for the full $20 million.
If the sales had accrued evenly over the year then we’d adjust both the revenue and C’o’S by $10 million, being the six-months from the acquisition date to the reporting date.
April 9, 2019 at 4:16 pm
Are you a fan of Star Wars, coz I keep seeing reference to it in your SBR notes examples! Like Vader, Maul, Ben, etc xD
May 24, 2019 at 11:33 am
Most people my age have an affinity with Star Wars………
April 4, 2019 at 12:27 am
Thank you for the lectures!
Probably a stupid question but the Example say that the goodwill of Vader(Parent) is impaired. So why are we deducting it from subsidiary.
April 4, 2019 at 7:20 pm
Glad you are enjoying the lectures.
The goodwill is measured using the fair value method and to ensure that the NCI get their share of the impairment we include it in the subsidiary’s column.
March 18, 2019 at 12:34 am
Sir, In calculating the goodwill impairment, where did the 85 came?
April 4, 2019 at 7:21 pm
It will be given in the question, but has been calculated using IAS 36, and you will see the detail of how to calculate a goodwill impairment in a later video.
February 26, 2019 at 2:39 pm
Could you confirm that inter-company unrealized losses are not eliminated for consolidation purposes? You said it is because of prudence and hence losses on inter-company transactions need to be recognized and thus not adjusted for. However, from the various sources that I found, both profits and losses have to be eliminated. In fact, I can’t see how prudence should get in the way of consolidation, because if the goods are remaining in the group, surely we need to adjust our financial statements as if the sale had never happened? If we retain the losses, then we’re not making a faithful representation because we’re being overly prudent.
April 4, 2019 at 7:22 pm
The unrealised loss will be recognised, assuming that it is at arm’s length.
June 22, 2019 at 10:01 am
But the loss is within the group so should therefore be ‘unrealized’!? That means the profits for the group are less than they should be!! I do not understand why prudence applies in such a scenario. And “none of the goods sold had been sold outside of the group by year-end”.
February 13, 2019 at 6:30 am
I have a question if we take nci at fv then we got full Goodwill and we need to deduct the NCI related Goodwill in group sploci and then its says 20% impairment in vader Goodwill so it means we need to deduct vader goodwill in impairment as well= 24*20%= 4.8.
Correct me if im wrong what we have to do?
Deduct only NCI Goodwill?
Deduct impairment of goodwill of parent too?
April 4, 2019 at 7:24 pm
In adjusting the subsidiary’s column the NCI will automatically get their share of the impairment when we total S’s profits for the year and give the NCI their share.
February 2, 2019 at 7:04 pm
Hi…the question says that Goodwill impairments are recorded in administrative expenses. I thought that we would need to takeout the $6m from admin expense first. Kindly correct me if my understanding is wrong.
An impairment is an expense, and so we need to add it to the other expenses to calculate the total administrative expenses,.
July 3, 2018 at 9:28 am
Thank you for your lectures,
Just had a question regarding this example problem,
The Impairment of Goodwill has been calculated in full i.e $6m , However the post acquisition period is only 6 months , so should we prorate it ? Please confirm if my understanding is right
July 3, 2018 at 3:06 pm
Glad that you enjoy the lectures.
The impairment is calculated at the reporting date and is reflective of the value of the subsidiary at that point in time, it not reflective of what has happened during the year. Therefore we include it in full at $6m and do not pro-rate it.
Hope that helps.
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