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Cons of foreign sub – gwill and NCI calc

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Cons of foreign sub – gwill and NCI calc

  • This topic has 4 replies, 4 voices, and was last updated 12 years ago by MikeLittle.
Viewing 5 posts - 1 through 5 (of 5 total)
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    Posts
  • April 20, 2013 at 12:41 pm #122965
    acca1974
    Member
    • Topics: 2
    • Replies: 0
    • ☆

    Confused as current kaplan book says something different from old kaplan book
    2 questions:
    Firstly, if calculating goodwill on a full basis, do you calculate the exchange difference on the total figure for goodwill then take the NCI% and group% from this total (option a) or should you work out the exchange difference for the group goodwill and NCI goodwill separately based on their goodwill amount (option B) ? example:
    cost of investment 40000 euros, FV of NCI at acquistion 7500 euros, net assets at acquistion 30000 euros
    full goodwill 17500 euros translated at closing rate (5) = $3500
    parents (80%) share of gwill 16000 euros @ CR (5) = $3200
    NCI (20%) share of gwill 1500 euros @ CR (5) = $300
    17500 euros at opening rate (4) = $4375 making exchange loss of $875
    Group share of exc. loss £700, NCI share $175 (option a)

    or Group 16000 euros @ opening rate (4) = $4000 less $3200 therefore exchange loss of $800 and NCI 1500 euros @ OR = £375 less $300 giving exchange loss of $75 (option b)

    Secondly, workings for NCI:
    1. NCI at acquistion at opening rate + NCI share of post acq profits for the year at average rate

    or

    2. NCI at acquisition + NCI share of post acq profits both at closing rate

    Thanks in advance

    April 20, 2013 at 4:18 pm #123022
    Satesh
    Member
    • Topics: 13
    • Replies: 54
    • ☆☆

    I would rather suggest you to follow IAS/IFRS treatment in this case, because I remember there is difference in calculation even the teachers follow different methods according to the exam kit/past paper answers but you better follow the one as suggested in IFRS 3.

    April 21, 2013 at 8:33 am #123056
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    I’m disappointed to see that my reply from Friday evening has not been successful – admittedly I was in the airport and nearly missed my flight. Now, too, I’m not in the best position to answer but I’ll hopefully get back to you later today

    June 6, 2013 at 6:13 am #129604
    elmira
    Member
    • Topics: 2
    • Replies: 12
    • ☆

    <cite> @mikelittle said:</cite>
    I’m disappointed to see that my reply from Friday evening has not been successful – admittedly I was in the airport and nearly missed my flight. Now, too, I’m not in the best position to answer but I’ll hopefully get back to you later today

    And what”s tne answer?

    June 6, 2013 at 8:27 am #129637
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    If I’ve read your options correctly, my inclination is to take the nci at date of acquisition, add their share of post acquisition profits, deduct their share of goodwill impairment, and then translate at closing rate
    Hope that has not added to the confusion!

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