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How do I calculate post acqn movement as well as net assets for the following;
Xplc subscribed for the shares in Yplc on 1st August 2013. Yplc made a profit after tax of 20,000 for the year ended 31st July and paid a dividend of 1000.
Given in the statement of financial position of Y plc as at 31st July 2014
Share Capital 25,000
Retained Earnings 19000Thank you.
Post acq retained is $19,000
I assume that you appreciate the subtlety of the word “subscribed” indicating that this is not a purchase of share on the open market. This is a company issuing shares upon the date of its incorporation (the date of the company’s birth)
So all the balance on retained earnings is post acquisition
OK?
I didnt quite understand.
But from what I did
X’s share in associate will be 22%*19000?Also, do we have to account for parents share of dividends paid by the associate?
i.e 22% of 1000?How can you suddenly introduce 22%!!!!!!??????
Investment in associate for the balance sheet will be “Cost of investment + 22% x post acq retained (that looks like 19,000 to me so long as you have given me full information) less any impairment (but there doesn’t appear to be any)
In the consolidated profit or loss, the group’s share of the associate profit after tax will be included as a pre-tax item and the dividend from the associate will be ignored (not included as investment income, nor as anything else)
Ok?
Sorry, I assumed I mentioned 22% in the first post. Sorry for the inconvenience.
But thank you!
Finally understood it!
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