Forum Replies Created
- Posts
it was so easyyy i was like ! r they kidding !! lovely paper. wish i get more surpises like this in f9 and f7
an offer can be kept open when offeree gives additional consideration to keep it open. if then offeror retracts his offer, offeree can sue him for loss of opportunity but cannot accept the contract then.
case of errington is different which is example of unilateral offer where one party gives promise to another for his act. if the act is already started by the offeree , the offeror cant retract the offer.in 99% times its Land and property/land and building, plus in information below financial statements in this harrington question, they told u abt land, dont u think that enough enough information to THINK that land was included.
retained reserves if u mean then thats how it goes
Parent’s own reserves now (i.e at Statement of Financial Position date)
+/- any adjustment to parent [eg Parent’s property revaluation or PUP deduction if parent sells to Sub]
Plus: Group share of Post-acqn Reserves of S (if losses you subtract)
plus: Group share of Post acqn profits of A (if losses you subtract)
less Impairment share of P both for S and A
Retained reserve figure for SOFPif there is no indication as to what to use, u can use whtever then. examiner is not a person from hell, he ll understand and he does understand. personally i d calculate full goodwill.
and if u r not sure abt anything, write ur assumption, even if u have assumed wrong, u assumed something, and solved accordingly u might get marks for solving the wrong thing correctly.u r right, availble for sale investment should go to equity. so for instance if u had to make statement of changes in equity, u have one column for retained earnings right, and u ll add tht amount there. but in this question u r not asked to do that socie, instead u have to update the retained earning reserve in the sofp only. so do it there.also retained earnings is part of equity reserve . as we all know under the heading of EQUITY in sofp we see retained earnings. 🙂
u r right, availble for sale investment should go to equity. so for instance if u had to make statement of changes in equity, u have one column for retained earnings right, and u ll add tht amount there. but in this question u r not asked to do that socie, instead u have to update the retained earning reserve in the sofp only. so do it there.
If loan is given as conisderation, it ll be included in all relevant calculations like goodwill.
loan is not included only when its not the part of consideration, then its more like inter co transaction. (in one of the questions P took over S’s 50% loan) but that wasnot as a part of consideration. p did that AFTER acquisition. in tht case its not part of consideration and inter co transactionnow apply this rule to all the questions where there is loan, and u ll see it fits every where
gw calculation:
consideration paid (loan notes, exhcnage cash)
add nci share at fv at acquistion
subtract fv of assets at acquisition
= goodwill
less full impairment (donot breakup)
net goodwill.Traditional view:
they say that as the loan capital increases in total capital structure of company, as debt is cheaper, the wacc (average rate from the combination of rates of debts and equity) will come down. which is understandable because debt is cheap so rate would be cheap. but shareholders r clever after certain level of debt, they would want to increase their return as company might face liquidation due to high gearing.M and M no tax: according to this theory they say that change as debt financing increases, shareholders will react to it quickly and wil increase their return demand. so on the one hand debt fianncing making wacc low, on the other hand returns for equity demand r rising. so wacc remains unchanged.
M and M with tax: in real life there r tax implications. so they revised their theory. this goes like debt is net of tax. i.e. tax deductible. so the interest u pay on tax will help u to pay less tax. now what happens is, debt will look even more cheaper because of its tax benefit.. so basically the more debt in ur capital structure investors i.e. the equity holders will increase their demand for return as the debt level increases but the proportion of increase of gearing. but tht INCREMENT wont be as much as the benefit from debt being tax decutible. so in theory its better if co is 99% debt financed.
but we know that can lead to liquidity hence not advisable.
HOPE IT MAKES SENSE 🙂hey zishumba
i have sent you 2 emails. one with kaplan study text and one with bpp.
if its any good, pray for me 🙂@yanlingw said:
Me too, i was confused on that 2000 interest from P, i think it should already included in 21000, can you explain this bit please? thank youand u r right, its already included in (adjusted ) in 21000. other wise the profit would have been 23000. now check my last post. should make sense
as for reserve: interest for 2000 from S to P was after acquisition . since we know it was mid year acquisition. had there been no loan issue, the profit would have been 21000+2000=23000. if we divide that by 2 (on the basis of mid yr acquisition), so before acquisition profit would be 11500 for pre aquisition and 11500 for post. and we know interest was paid post acquisition. that makes 11500 – 2000 = 9500.
for finance cost:
3000 for S.
if there was no interest to be paid (assume) the cost would have been 1000 (3000-2000)
1000/2 = 500 as we need for 6 months only
however payment of 2000 was made in last months as well.
so 2000+500 = 2500(u cant divide 3000/2 because the interest of 2000 was paid ONLY POST ACQUISITION not pre. so no share of 2000 should go in pre)
hope u get it now 🙂
thanks mike, i got the answer for this in the forum explained by yourself. just an extension to this one :
I am not getting finance part of comphresive income statement. can you please explain tht bit as well.
in solution its somethin glike
3000-2000 = 1000 x 6/12 + 2000 for salvathanks for that. for the same question
I am not getting finance part of comphresive income statement. can you please explain tht bit as well.
in solution its somethin glike
3000-2000 = 1000 x 6/12 + 2000 for salvasorry it would be / should be
yr 2
debit reval – 5000
debit i/s 3000
credit asset 8000
now does it make more sense?sorry it would be / should be
yr 2
debit reval – 5000
debit i/s 3000
credit 8000
now does it make more sense?its for bonus issue. 1 share for 10. 11/10 . i dont know why they did so. but by looking at other solution (saviour) what i deduced is, when in a question u have right or normal issue before bonus, for weighted average u do this bit. what I have just said would be more clear if u look at saviour question. there in part a) they issued normal shares first then bonus then right issue. 5/4 was done for normal shares as it was before bonus. In fenton both right issue and normal issue are before bonus so they did 11/10 for both of them.
hope it makes senses. again i dont know whats the logic.hi there i would like to solve that questions as well, though i dont have Kaplan kit. if you have pdf version can you please share it . or just type the question and all of us will do it. will benefit you and us !
if you are willing to send pdf my id is batoolhudda@hotmail.com@drose said:
Please note the qu. asked for G/w at DOA, no impairment to be deducted.Review.What amt. did you get for NCI (SOCI)?here he/she is right, impairment should not be deduted yet as they have asked for goodwill at acquisition. Impairment was subsequent to acquisition. If you do include impairment, its not wrong, so no mark will be deducted or if examiner is having a bad day 0.5 might be deducted.