Chapter 4 – Example 3

Hi Tutor,

In this example, it was clearly stated that the acquisition date was 1 Jan 2015, but the solution was done as if the acquisition date was 1 Jan 2014. At 1 Jan 2014, the subsidiary’s R.E and O.C.E were 600m and 400m; these were the figures used for R.E and O.C.E @ acquisition date in W2 of the solutions. I didn’t use those figures; I had to determine what the subs’ RE and OCE would have been at 1 Jan 2015, assuming that RE and OCE grew evenly over time; that way I got 800m and 513m as RE and OCE @ 1 Jan 2015 (acquisition date).

Am I right? Or is there something I am not getting right?