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I feel the consolidation was fair, i am really stressed about the discussion questions thou, like i am not sure if i was right or wrong in my answers and all the topics i had labored on and i was really ready to attack did not even make an appearance….
Question 1a. Got thrown off by the disposal consideration being share value exchange, also did several adjustments for FV. The rest of qn 1b. was straightforward equity accounting associate and susidiary with dicussions on ifrs on what constitutes control. Ethics thought should also discuss related party disclosures and director ethical responsibility and impact of non dicslosure.
Skipped 2-no time to read seemed vague and ambigous. Did 3 & 4.
Question 3 part a; seemed like a lease ,so discussed the treatment-fingers crossed here. part b knowledge b/f R&D capitalisation and expenditure.and also applied bits of ias 37 provisions.Part c fingers crossed once again cant even remember what i discussed.
Quetion 4 was my fav.I had question spotted fair value and historical cost in my revision.
All in all i hope i dont have to do the SBR
Could someone please explain the final part of Question 3? I’m not sure I remember what the question asked, it was regarding the CRO and the prepayment of the contract.
Well there is no gain or loss for disposal computation coz the control wasn’t lost..
I didn’t put the 10.5 mill at reporting dateQ2 was bad…
But overall I gave it my allwhy would the parent give it own shares when it transfers the ownership of the sub ? hmmm maybe i didnt read it properly :O
@sajini said:
For question 1
the disposal of 10% by share for share exchange, how is it suppose to be dealt? Normally it is cash..I did credit equity(new shares at fv) and credit nci. Both these amounts added to other componenta of equity
Correct ir wrong?And for the net asset computation.
The contingent liability was nt shown so we include at the date of acquisition which was 5 million. The question said the contingent liability was settled at the reporting Dat for 10.5 mill or something.My doubt is do we put 10.5 million in net asset computation at the reporting date?
For the 10% disposal
Dr. Investment
Cr oce
Cr nciFor the contingent the 10.5 will not be recognised in the yr end as it was after yr end and the 5 will be used to deduct net asset at acquisition and reportinh
how did you deal with the share exchange btw ? did you need to adjust the share capital ?
I’m really not sure anymore haha can someone clarify what happened in the share swap?
@tomlloyd393 said:
I’m really not sure anymore haha can someone clarify what happened in the share swap?I calculated as follows:
Consideration = 2/3 (share-for-share ratio) * 4 (market value) * 200 (shares of subsidiary) * 10% (disposed shareholding) = 53,33.
Less: Increase in NCI = 10% * (Net assets at reporting date + goodwill at reporting date) = 40 (to my mind it was 40).
The double entry then is:
Dr Investment in associate: 53,33
Cr NCI 40
Cr RE 13,33Does anyone agree? 🙁
1) for goodwill of Alston. I did everything normal, adjusted for the 5m contingent liability at fair value
Then since within 12 months of measurement period, it was settled, I adjusted the difference of goodwill
So my initial goodwill was around (28) then after the measurement adjustment it went to (22) or something
2) can anyone confirm if Q3 (a) (the one about medical supplying instruments at nil cost) was a lease related question or not?!
Initially I was so happy since it had all the indicators of wanting you to write about finance vs operating, but I felt alsmot it was a revenue question?
And for the adjustment to parent equity (disposal of 10%)
I calculated my NCI as normal, took (10/original NCI holding) then added this result to my NCI since NCI has increased due to this disposal and then took the share proceeds (48 I think) – my NCI adj and the resulting figure (adj parents equity) goes to retained earnings in the parents column
@nathan488 said:
1) for goodwill of Alston. I did everything normal, adjusted for the 5m contingent liability at fair valueThen since within 12 months of measurement period, it was settled, I adjusted the difference of goodwill
So my initial goodwill was around (28) then after the measurement adjustment it went to (22) or something
I think that we don’t need to additionally adjust the goodwill, if no impairment occur.
@jmmyjimmy said:
I think that we don’t need to additionally adjust the goodwill, if no impairment occur.Not sure if this posted or not but essentially IFRS 3 states that for any adjustment within 12 months of the acquisition date that affects goodwill due to facts at that date (ie: using provisional figures) is warrant for an adjustment to goodwill.
I ageee there’s no impairment to goodwill since we were told none in the Q.
But in my mind, since the liability was settled within 12 months of the acquisition date, that change should’ve adjusted goodwill
@jmmyjimmy said:
I calculated as follows:Consideration = 2/3 (share-for-share ratio) * 4 (market value) * 200 (shares of subsidiary) * 10% (disposed shareholding) = 53,33.
Less: Increase in NCI = 10% * (Net assets at reporting date + goodwill at reporting date) = 40 (to my mind it was 40).
The double entry then is:
Dr Investment in associate: 53,33
Cr NCI 40
Cr RE 13,33Does anyone agree? 🙁
Why retained earning not oce
Like i applied the same when we get cash as we dispose off@nathan488 said:
Not sure if this posted or not but essentially IFRS 3 states that for any adjustment within 12 months of the acquisition date that affects goodwill due to facts at that date (ie: using provisional figures) is warrant for an adjustment to goodwill.I ageee there’s no impairment to goodwill since we were told none in the Q.
But in my mind, since the liability was settled within 12 months of the acquisition date, that change should’ve adjusted goodwill
If we include in our net assets the comtingent liability then automatically the fv of na figure goes to goodwill..why do we deduct it again
@mumbaikar said:
If we include in our net assets the comtingent liability then automatically the fv of na figure goes to goodwill..why do we deduct it againI may be wrong but if I remember correctly, the contingent liability wasn’t included in the initial FVNA
So you had to do the difference in FVNA and book value, that difference was due to depreciating PPE
Then you had to adjust goodwill for the contingent liability. They told you the BV and FV
You then bring it in at FV (5)
I then also did a subsequent adjustment on my goodwill since the CL was settled within 12 months but I’m not sure if that’s correc or not
180 was the SC
10% was 18
2/3 was 12
12*4 =48 for fv of considerationHowever I messed up the nci and just uses 10% of 390 (n.a. at reporting date)
To give a gain on disposal of 9
48-39 =9
Section 2 and 3 seemed to both have leases? One operating and one finance? These were tricky as the lease in Q3 was for the entirety of the useful life but the lessor retained legal right
The other one was the gas contract for storage now my view was they were leasing the building as it was fixed payments at regular intervals may be completely wrong but I hope I get some credit , they clearly shouldn’t be capitalising as intangible asset
Seemed to be lots of ethics too , one of the companies valuing the shares of the company they loaned to far too high in order to increase assets , also they wanted to go away from amortized cost when their business model prescribed it under ifrs9 which was dodgy
Hope i get enough credit for the bits I did as I know as always with this exam there will always be mistakes, feel like I did much better than my previous attempt which gave me a 39 (march18)
@craighughes88 said:
180 was the SC
10% was 18
2/3 was 12
12*4 =48 for fv of considerationHowever I messes up the nci and just uses 10% of 390 (n.a. at reporting date)
To give a gain on disposal of 9
I think your approach was correct.
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i calculated with 180 too
@jmmyjimmy said:
I think your approach was correct.There shouldnt be any gain/loss on disposal because the parent still owns plymouth only the shareholders are changing. No change in control
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