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Hi
the test on this chapter in opentuition question 1, how do we get 1,200,000 @ $2.60.
how do we get the figure 1.2m form?
thanks
Hi,
If there are $2,000,000 50c equity shares, then there must be 4,000,000 shares in issue. As the parent has acquired 70% then the NCI own 30% of the 4,000,000, which gives the 1,200,000.
At acquisition these shares were valued at $2.60, the market value of the subsidiary shares.
To calculate the NCI at the 31 December reporting date we need to add 30% of the post acquisition profits to the NCI at acquisition figure calculated above.
The post-acquisition retained earnings movement comes from the difference between the retained earning at acquisition of $640,000 and those at the reporting date of $720,000, with adjustment made for the additional depreciation due to the fair value increase of building.
Have another go using the information given and see how you get on.
Thanks
i still dont understant.. 🙁 why do we do fair value adjustment 2.4m$/8/3? why do we divide it by 3 and 8?
posting after watching the lectures several times..
Hi,
They are finding the depreciation for the period from 31 August 2014 to 31 December 2014. So we divide by 8 as the remaining life is 8 years and then there are 4 months until the year end from the acquisition date so we are then pro-rating the annual depreciation.
Don’t get too hung up on it as it is a very tough question first up.
Thanks
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