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Complex group disposals

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Complex group disposals

  • This topic has 5 replies, 2 voices, and was last updated 11 years ago by MikeLittle.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • May 19, 2014 at 9:11 pm #169562
    meaow01
    Member
    • Topics: 23
    • Replies: 37
    • ☆☆

    1= As we know we put an adjustment for NCI in Subsidiary for Share of Consideration paid for acquistion of SUB-SUBSIDIARY.

    When there is a decrease/increase in NCI due to changes in structure.
    I calulate INCREASE/Decrease by this
    (NCI at transaction date (of disposal/further interest) * % Change in NCI holding

    My Question is if Subsidiary disposes interest in Sub-Subsidiary ; that NCI ADJUSTMENT is not proportionated?

    2=Also ,can you guide which standard to refer to for additional study for complex group structure (is there any guidance ?)

    May 20, 2014 at 7:05 pm #169709
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23315
    • ☆☆☆☆☆

    1) Give me a question reference

    2) IFRS 3 I believe

    May 22, 2014 at 5:45 pm #170183
    meaow01
    Member
    • Topics: 23
    • Replies: 37
    • ☆☆

    Ashanti June 2010

    1.Ashanti Acquired Bochem ,Bochem Acquired Ceram. ( Bochem’s NCI will be adjusted for Consideration paid for Ceram)

    Ashanti Disposes 10% equity interest in Bochem to NCI .

    How would Increase in NCI would be accounted for.
    (Should the BochemNCI at transaction date would be completely proportioned?without taking account of NCI Adjustment —- as normally i take carrying amount of NCI at transaction date and proportionate it according to the change in NCI)

    May 22, 2014 at 7:22 pm #170204
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23315
    • ☆☆☆☆☆

    Meaow – am I not correct in saying that not only does the examiner’s answer in workings W2 and W3 answer your question but, in addition, the examiner has kindly pointed out that the method he has adopted could equally well be treated differently “However, goodwill could be calculated from the entity’s perspective ($47 million) which would give a signi?cantly different goodwill and gain/loss on disposal ?gure.”

    May 23, 2014 at 6:49 pm #170364
    meaow01
    Member
    • Topics: 23
    • Replies: 37
    • ☆☆

    1- For Disposal of Ceram, Examiner provided “NCI of Ceram attributable to
    Bochem” (not Ashanti) .and Also included this in gain/loss calculation

    ^ , is this the reason that portion of gain/loss is attributable to NCI of bochem?

    2-How is the 30% calculated ? [Bochem had 80% holding,disposed of 50% ,that lefts with 40% holding on associate for Bochem ]

    3-Increase in NCI :
    Amount recognised as non-controlling interest (Net assets per question at year
    end $210m + Fair value of PPE at acquisition $10m – depreciation of fair value
    adjustment $4m + goodwill (44 – 8·8)) x 10%

    Does that mean NCI-adjustment for Ceram ,should not be apportioned?

    May 25, 2014 at 5:17 pm #170768
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23315
    • ☆☆☆☆☆

    1 “, is this the reason that portion of gain/loss is attributable to NCI of bochem?”

    Yes

    2 “How is the 30% calculated ? [Bochem had 80% holding,disposed of 50%”

    What’s 80 less 50? The question says “Bochem disposed of 50% of the equity of Ceram” not “50% of the holding”

    3 “Does that mean NCI-adjustment for Ceram ,should not be apportioned?”

    I’m sure that the end of my previous post answered this! The examiner states that goodwill could be calculated using an alternative approach and that will result in radically different figures for goodwill and loss on disposal which will in turn affect the nci

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