Changes in group structure - examples - ACCA SBR lectures
YouTube video
14 Comments
C
Christina·
Hi,
Where is the full answer to question 7?
Thanks
P
Prasant·
Hi Chris, Where can i find the detailed answer to Example 7?
Thanks
G
Georgios·
As a Greek, the last comment offends me :D :D
Thank you, very useful! :)
T
Tom·
Hello, thank you for the lectures and all materials, they are very helpful.
I wanted to ask about one thing - you recommend to read ACCA article Business combinations – IFRS 3 (revised)
There is an example 5 about step disposal when no control is lost and we should record the increase in NCI.
EXAMPLE 5
Disposal of part of holding to NCI
Using Example 4, instead of acquiring a further 10%, Rage disposes of a 10% interest to the NCIs in Pin on 31 December 2008 for a cash consideration of $65m. The carrying amount of the net assets of Pin is $535m at 31 December 2008.
In the solution given (in the article) to calculate the decrease of NCI the goodwill of 90 is considered, which surprised me a lot.
Transfer to NCI (10% x (535 net assets + 90 goodwill)) (62.5)
The increase to NCI, which I calculated, was 75.5 (being the NCI at acquistion 210 + NCI share of post acq reserves 16.5 and the ratio %sold to NCI before disposal 10%/30%).
Can you explain why goodwill was included to calculate decrease of NCI in example 5, and not included it in example 4 to calculate the increase of NCI?
A
Ashley·
Hi Sir,
Thank for your lecture. I have tried to consolidate the Financial Posotion statement of the 3 companies @31 Dec 20X5, but it is still unbalance. I think there is something wrong with my working on the NCI on the consolidated FS. I hop you can help.
Asset:
Non-current asset = 180 + 115 + 100 = 395
Goodwill = 10 + 23 = 33 (working previously from the lecture)
Current asset = 80 + 90 + 60 = 150
Total asset = 395 + 33 + 150 = 578
Liability and equity:
Non-current asset = 15 + 14 + 10 = 39
Current asset = 50 + 46 + 30 = 126
Share capital = 250
Retained earning = 110 (parent full retained earning) + 24 + 9 (subsidiary post retained earning) - 1 + 7 (effect of 31 Dec 2015 transaction) = 149
Non-controlling interest = 40 + 13 (NCI @ acquisition date) + 16 + 1 (NCI post acquisition RE) -14 + 28 (effect of 31 Dec 2015 transaction) = 84
Total Liability and equity = 39 + 126 + 250 +149 + 84 = 684
There are 70 mil unbalance, I can not spot the mistake.
S
Sachin·
Hi I dont know whether you have found the answer.
But could you please check the Subsidiary retained earnings, Why have you taken 24+9 instead of 65 and 45?
L
Limbikani·
In example 6, is the date of disposal 2015 or 2012?
T
Trong Hieu·
Teacher,
I think in Example 5, we should calculation 'Carry value of 20% JONES' shares disposal' according to 'Carry value of Net assets of JONES at 31/12/15 plus Goodwill of JONES at 1/1/15' instead of use NCI (=14)*20/10.
Check with 'Example 5 technical articles acca IFRS 10' and with 'exmple 3 opentution note'
My opinion for JONES' shares transactions is:
Carry amount of net assets of JONES at date of change equity (31/12/2015):
= FV of net asset of JONES at acq-date (1/1/15) + Change JONES equity post acq-date (from 1/1/15-31/12/15)
= (75+35) + (45-35) = 120
(Assumption that net book value of net assets at acq-date = FV of net asset at acq-date)
GW at acq-date (1/1/15) = 23 (for calculated above)
Therefore Carry amount of 20% share disposal = (120+23)*20% =28.6
So double entry:
DR: Cash 35
CR: NCI 28.6
CR: RE 6.4
L
Laura·
on the lecture notes it says debit RE not OCE? which one is the best option to debit?
C
ch·
OCE include share premium, revaluation reserve, gains/losses on fair value through other comprehensive income investments.
Part 1 of the question involved a gain on disposal when cAlculate the goodwill, since part two is related to part 1, this might be the reason for debiting OCE instead of Retained earning?
Z
Zura·
As always, very useful and interesting lecture, thank's tutor.
A
accajapass·
I have the same question as aditya7. Please explain why there is a reduction in OCE.
Y
YASH·
Hello,
I also wanted to ask the same question as above.
Thanks
Yash
A
Aditya·
Hi Chris,
thanks for the video lectures !
I was wondering what exactly is the component in OCE thats reducing due to the transfer ? If its not the goodwill impairments and there are no revaluation gains or loss calculated then what is reducing within the OCE, what does that balancing figure of 1.1m represent ?
Where is the full answer to question 7?
Thanks
Thanks
Thank you, very useful! :)
I wanted to ask about one thing - you recommend to read ACCA article Business combinations – IFRS 3 (revised)
There is an example 5 about step disposal when no control is lost and we should record the increase in NCI.
EXAMPLE 5
Disposal of part of holding to NCI
Using Example 4, instead of acquiring a further 10%, Rage disposes of a 10% interest to the NCIs in Pin on 31 December 2008 for a cash consideration of $65m. The carrying amount of the net assets of Pin is $535m at 31 December 2008.
In the solution given (in the article) to calculate the decrease of NCI the goodwill of 90 is considered, which surprised me a lot.
Transfer to NCI (10% x (535 net assets + 90 goodwill)) (62.5)
The increase to NCI, which I calculated, was 75.5 (being the NCI at acquistion 210 + NCI share of post acq reserves 16.5 and the ratio %sold to NCI before disposal 10%/30%).
Can you explain why goodwill was included to calculate decrease of NCI in example 5, and not included it in example 4 to calculate the increase of NCI?
Thank for your lecture. I have tried to consolidate the Financial Posotion statement of the 3 companies @31 Dec 20X5, but it is still unbalance. I think there is something wrong with my working on the NCI on the consolidated FS. I hop you can help.
Asset:
Non-current asset = 180 + 115 + 100 = 395
Goodwill = 10 + 23 = 33 (working previously from the lecture)
Current asset = 80 + 90 + 60 = 150
Total asset = 395 + 33 + 150 = 578
Liability and equity:
Non-current asset = 15 + 14 + 10 = 39
Current asset = 50 + 46 + 30 = 126
Share capital = 250
Retained earning = 110 (parent full retained earning) + 24 + 9 (subsidiary post retained earning) - 1 + 7 (effect of 31 Dec 2015 transaction) = 149
Non-controlling interest = 40 + 13 (NCI @ acquisition date) + 16 + 1 (NCI post acquisition RE) -14 + 28 (effect of 31 Dec 2015 transaction) = 84
Total Liability and equity = 39 + 126 + 250 +149 + 84 = 684
There are 70 mil unbalance, I can not spot the mistake.
But could you please check the Subsidiary retained earnings, Why have you taken 24+9 instead of 65 and 45?
I think in Example 5, we should calculation 'Carry value of 20% JONES' shares disposal' according to 'Carry value of Net assets of JONES at 31/12/15 plus Goodwill of JONES at 1/1/15' instead of use NCI (=14)*20/10.
Check with 'Example 5 technical articles acca IFRS 10' and with 'exmple 3 opentution note'
My opinion for JONES' shares transactions is:
Carry amount of net assets of JONES at date of change equity (31/12/2015):
= FV of net asset of JONES at acq-date (1/1/15) + Change JONES equity post acq-date (from 1/1/15-31/12/15)
= (75+35) + (45-35) = 120
(Assumption that net book value of net assets at acq-date = FV of net asset at acq-date)
GW at acq-date (1/1/15) = 23 (for calculated above)
Therefore Carry amount of 20% share disposal = (120+23)*20% =28.6
So double entry:
DR: Cash 35
CR: NCI 28.6
CR: RE 6.4
Part 1 of the question involved a gain on disposal when cAlculate the goodwill, since part two is related to part 1, this might be the reason for debiting OCE instead of Retained earning?
I also wanted to ask the same question as above.
Thanks
Yash
thanks for the video lectures !
I was wondering what exactly is the component in OCE thats reducing due to the transfer ? If its not the goodwill impairments and there are no revaluation gains or loss calculated then what is reducing within the OCE, what does that balancing figure of 1.1m represent ?
Thanks.