Ausra and Danute

Hi Mr Mike, I have a question from your note.

Ausra acquired danute 31 March 2011

on 31 october 2011

Danute
RE-124000

Note:
At the date of acquisition , some of Danute’s inventory had a FV 12000 in excess of its carrying value.All of this inventory had been sold before the year end.

Profits for the year year ended on 31 october 2011(before any necessary adjustments to be made) were 60000.

60000*5/12=25000-pre acquisition
60000*7/12=35000-post acquistion

I recognised at AD (124000-35000)89000
I recognised DR-124000
Post acquisition period-35000

Here is question arising that, if inventory has been sold at the date of acquisition, do i have to include it to AD Retained earning b/f(89000+12000)=101000-Could you explain it this part?

“Profits for the year year ended on 31 october 2011(before any necessary adjustments to be made) were 60000.

60000*5/12=25000-pre acquisition
60000*7/12=35000-post acquistion”

Crucially, there is an adjustment to be made that makes this profit split (that you show) incorrect

So there’s no point in me pursuing your question until you sort out the workings to arrive at the correct profit allocation between pre- and post-acquisition

(I really would prefer not to have to answer this! What on Earth can you possibly mean “… if inventory had been sold at the date of acquisition, …”)

Last time you said it was incorrect.
36000 included inside of 60000 but i have to deduct it from firstly from 60000 which will be 24000 then

Pre 24000*5/12=10000
Post 24000*7/12=14000 then 36000 is added over 14000=50000

so coming to inventory it says depite inventroy’s acquisition date was excess of 12000 but it has been sold before year end.so here is 12000 will be added 10000(22000) because at acquisition date it was still existed but date of reporting it will be deducted from again 50000-12000=38000

BY the way i derecognise inventory in goodwill calculation because it was sold before year end.

I found it correctly that time.I also looked through your answer note but did not understand firstly but then i found suddenly by thinking really two days because my brain is full of info..it was a good tactics inside of Ausra and DAnute.

Coming to issue cost on loan note, Why i do not added over expenses instead we deduct because
double entry

Debit issue cost on loan note
credit issue cost(so deducted from expenses)

However, coming to borrowing cost and loan note in prior posts, I fully understood it.First time, i faces these kind of setbacks in consolidation.So there is no any unclear parties still in consolidation.

Thank you very much.Now i am comfortable to find the answers of these questions.