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Hi,
I’ve a question on the group RE calculation. To arrive at the group’s RE the subsidiary’s (Madrid’s) RE are decreased by $8m which stands for a fair vaule (@ acquisition date) of a sold inventory by the year end. Is that right to deduct a fair value of and asset sold during a year from the RE?
Thank you!
AnnaHi,
Yes, as the fair value of the inventory needs to be recorded at the acquisition date as per IFRS 3. If we don’t reflect that it then the post-acquisition profits will not show the true profit to the group of selling the inventory as the subsidiary will not have made the acquisition date adjustment.
Thanks
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