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Dear Sir
I have questions on june2013 paper
1 june 2011.Trailer acquired 14% interest in Caller .on the same day as Park acquired 70 % of Caller.
1 june Trailer acquired 60 % interest in Park thereby gaining control of sub sub Caller.
Model answers calculate Goodwill and post acq retained earnings using net assets and retained earnings figures from 1 june 2011 as “at date of acquisition”1.I understand that the sub park acquired control on this date i june 2011 but Trailer only acquired control on 1 june 2012. What is the rationale behind this treatment seeing these are Trailer Group consolidation not Park Group.
Is this not a step acquisition which would mean we recognise the acquisition from date when control is gained
Hi,
The date that both Park and Caller became members of the Trailer group is 1 June 2012, so they will have used the retained earnings figures from that date.
There is a step acquisition but only from an investment at 14% to a subsidiary. Any gain on the 14% investment needs to be removed from the group accounts.
Thanks
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