Forum Replies Created
- Posts
Thank you John!
The queston though didn’t ask what shall the spot rate be for non-exercised option to be
the same as futures. It directly asked which derivative will give the highest recepit.
Apparently between the lines the question was as you clearly explained ).Dear John,
pls disregard the question, understood it was the lock-in concept. Thnks anyway!
reading it again – is it that both a) A in L and b) K in L are both goodwill of A in L (same as the case in Ex 3 with M in V). They are separated in Ex 4 simply account for for direct investment of A in L in a) A in L schedule?
Dear Mike,
just to not open a new topic i’d ask you here. Is BPP study text from 2012 (stating up to June 2014 exams) good enough for June/December 2015? Or it is seriously outdated?
Dear Mike, just read your recent asnwer on IFRS 13 in another topic:
..The three methods are ranked in preferential sequence. For first choice we would turn to the market approach and arrive at a fair value that way…
Why is here market approach first choice, but when we measure fair value of a susbidiary you say market value is noncense?
Could it be that the difference is that there are 2 fair values of the subsidiary:
1) market value that includes “intangibles” like you say – market expectations, quality of managament, competitors, etc.
2) but for consolidation purposes we measure fair value of only ‘identifiable’ net assets in the subsidiaty’s balance sheet.
Then in fact the first market value is what we pay for the subsidary (if there is traded market shares, that is) and the difference between the 2 fair values is the goodwill. Can that be the right point?
Really confusing issue it is.….All manner of things affect the market price of a company’s share on the market…
That’s right but is there a better way?
a) Even the example itself states in p.8: “The directors valued the nci investment on a fair value basis using the market value of the Danute shares as a fair measure”. If they value NCI using market value then it must be logical to measure the fair value of the subsidiary on the same basis. Otherwise there is no consistency and logic.
b) Isn’t IFRS itself in several places reffering to the quoted/tradeable market value as a main way to determine the fair value?
Nothing to be sorry about ). Far from saying you are wrong.
Dear Mike,
Sorry, not OK ), becasue you are right about casino etc, but the fact that market reflects the true value is fundamental in business valuation. If the market share value had been too high, market participants would have made the same calculations of fair value (share capital + premium + fv adjustments, etc) and the price of the shares would go down so that the market value of the subsid. shares is 146,000.
IFRS 13 defines fair value as „the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date“. Isn’t that the market value?
Even in your leacture the fair value of NCI is also based on the market value of the shares.
Dear Mike,
Question about your revision lecture – Simple Groups part 3 Example 1, when Ausra bought 75% of the Danute.
Question abour subsidiary Fair Value at DoA. We/You calculate it as share capital + premium + retained earnings + fv adustments, etc. and come to 146,000.
Why is FV of the subsidiary at DoA not just number of Danute shares (80,000) by their market value at DoA (2.2) = 176,000?
Thank you for the answer and sorry if its silly question.
