9 Barcelona and Madrid question (study text)

AAnna7y ago

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! Anna

P2-D2Tutor7y ago#1

Hi, 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

AAnna7y ago#2

Thank you!

P2-D2Tutor7y ago#3

You're welcome!

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