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Consolidation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Consolidation

  • This topic has 1 reply, 2 voices, and was last updated 5 years ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • August 16, 2019 at 8:25 am #527781
    saurabhnaik7
    Participant
    • Topics: 3
    • Replies: 0
    • ☆

    Kaplan F7 exam kit question no 373

    The question states

    Also at the date of acquisition Sander had intangible asset of 500000 for software in SFP.
    Picant’s directors believe that software has no recoverable value and wrote it off shortly after acquisition.

    Question
    Why is the 500k added back in the post acquisition column?

    WN2 Net assets of Sander
    ——————————————— At acquisition—————- At reporting—–Post acquisition
    Share capital —————————— 8000————- 8000
    Share premium
    Retained earning———————– 16500————- 17500———————1000
    Fair value adjustment ——————– 2000————2000
    Software writen off————————— -500—————0————————-500
    Additional depreciation———————————————- (-100)———– (-100)
    Total———————————————- 26000————–27400—————-1400

    August 18, 2019 at 7:04 am #527913
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7171
    • ☆☆☆☆☆

    Hi,

    The software was written off, and so the net assets at acquisition have been reduced by 500. The software is then not in the net assets calculation at the reporting date, so the movement is from -500 to nil, which is an increase of 500 and hence the 500 being added back in the post-acquisition column.

    Personally, I’d just look at the total of each of the two columns, and use the overall movement here as opposed to looking at it on a line-by-line basis.

    Thanks

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