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Are they question 30 (Parentis) & 31 (Port& Alfred) in BBP revision kit?
What difficulties do you meet with them?Question 30 (Parentis) & 31(pedantic)
GOOD WILL calculation & NCI Calculation…can u explain me plss- Topics: 0
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Question 30 (Parentis):
(W1) Group structure:
+ Parentis holds 75% of Offspring (600shares/(200shares x 0.25)) on 01/4/20X6
+ Time apportion: Not available(W2) FV purchase consideration
+ Exchange shares: (600m shares x 1 share x $0.75)/ 2 shares = $225m (unaccounted)
+ Loan note: $100 x (600m shares/ 500 shares) =…………………….. $120m
(accounted)
+ Deferred payment: PV=600m shares x $0.11 x 1/(1+10%)^1 =…..$60m
(unaccounted)
FV purchase consideration = $225 + $120 + $60 = $405m(W3) FV adjustment of asset of Sub (Offspring) (note i per Q):
FV adj (=FV-BV)…………….40m
Add depre ……………………(2m)
Net FV adj ………………….38m(W4) Group g/w @ acquisition date 01/0420X6
+ Consideration purchase (W2) ……………………………………………………………..405m
+ Groupshare of FV of Net Asset of Sub (Offspring)………………………………….(270m)
75% x [40m (FVadj W3) + 200 (SC) + 120 (RE@acq 1/4/20X6)]
= 75% x 360m = 270m
G/w ……………………………………………………………………………………………….135m
Impairment g/w. (note iv given in Q) …………………………………………………..(27m)
–> Net G/W ……………………………………………………………………...108m(W5) (note ii) Intecllectual property of Offspring:
+ On books of Offspring: 30
+ ‘cos of illegal, its value is written down by (20)
Received compensation by Gorvement: 10–> Entry:
Dr Recevable… 10
Dr I/S……………..20
Cr Property……..30Intellectual property is written down by 20m–>Profit of Offspring decreases by 20m
—> Impact:
+ Group reserve – 75% x 20m (deduct to Sub)
+ NCI – 25% x 20m(W6) Intra-trading goods: Offspring (Sub) sold goods to Parentis (Parent)
URP = Profit of Seller (Offspring) x % stocks of Buyer (Parent)
= $6 x $5m/15m = 2m
–> Impact:
+ Group reserve – 75% URP (75% x 2m)
+ NCI – 25% URP (25% x 2m)(W7) NCI @ B/S date 31/03/20X7
+ Net FV of net asset of sub (Offspring) @ B/s………………………………………………378
38m (net FV adj W2) + 200 (SC) + 120 (RE@01.04.20X6) + 20 (RE for the year ended 31/3/20X7)
+ Intellectual property loss (W5)………………………………………………………………….(20)
+ URP (W6)……………………………………………………………………………………………..(2)
356m
x 25%
NCI = 89m- Topics: 0
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Please remember:
Since acquistion date onwards, any factor affects profit of Subsidiary (make Sub’s profit decrease/increase) –> impact:
Reserve group -/+ (Groupshare x amount)
NCI -/+ (NC share x amount)You can see this impact in above W5 & W6.
For example: Sub sells goods to parent
—> Impact:
Reserve group – Groupshare of URP (75% x URP)
NCI – NCI share of URP (25% x URP)- Topics: 0
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yes i agree with the anser
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- Replies: 2
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yes i agree with the anser
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