• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

Congratulations to Jamil from Pakistan and Jeeva from Malaysia - Global Prize winners!
see all ACCA December 2022 Genius Hunt Competition winners >>

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

Consolidation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Consolidation

  • This topic has 5 replies, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • November 22, 2015 at 12:23 pm #284520
    racucamelia
    Member
    • Topics: 34
    • Replies: 39
    • ☆☆

    Hi John,

    I have two different questions for which I am not sure about the answer.

    1. Really aquired 75% of ordinary share capital of Hard on 01.01.20×9, when Hard had losses of 112000 $. Also, Really aquired 30% of ordinary share capital of Work, when Work had retained earnings of 280000 $.
    The summarised statement of financial position at 31.12.20×9, for retained earnings is: Really – 2464000 $ and Hard – 1204000 $. What if the consolidated amount for retained earnings?

    2. Entity A aquired 60% of issued shares of B by exchanging 3 shares in A for 2 shares aquired in B. B had issued at that date 100000 shares. At aquisition date the fair value of one share in A was 3.5 $ and the fair value of a share in B was 2 $. What was the fair value consideration paid by A to gain control of B?

    For second problem I am not sure why, for the amount calculus, is taken into consideration the value of 3.5 $. -> 100000*60%*3/2*3.5. Why not the fair value of B share?

    Thank you,

    Camelia

    Camelia

    November 22, 2015 at 12:47 pm #284535
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51560
    • ☆☆☆☆☆

    1. I can’t answer this without seeing the full question. The consolidated retained earnings are all of Really’s (2,464,000) plus 70% of Hard’s post-acquisition earnings (70% x (1,204,000 + 112,000)), plus 30% of Work’s post-acquisition earnings. You have not given enough information to be able to calculate the post-acquisition earnings of work.

    (Work is an associate and therefore you cannot really be asked question in the exam that involve numbers for associates.)

    2. They have taken the value of A’s shares because it is A’s shares that are being given and therefore the value of what is given is the amount paid.
    (This cannot be asked in Paper F3. I have a feeling you have got if from Kaplan, but it should not be there (and I thought they had now removed it).

    November 22, 2015 at 1:08 pm #284543
    racucamelia
    Member
    • Topics: 34
    • Replies: 39
    • ☆☆

    Hi John,

    yes, the questions are from Kaplan. They didn;t remove it.
    Just one more question. Why the amount of 112000 is added back to profit if it is a loss?

    Thank you,

    camelia

    November 22, 2015 at 1:56 pm #284559
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51560
    • ☆☆☆☆☆

    Because to go from -112000 up to zero needs them to make a profit of 112,000. Then to go higher and have retained earnings above zero, needs even more profit 🙂

    November 22, 2015 at 2:07 pm #284567
    racucamelia
    Member
    • Topics: 34
    • Replies: 39
    • ☆☆

    I understand now. Thank you so much for your time and explanation.

    You are a great teacher.

    Camelia

    November 22, 2015 at 2:09 pm #284570
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51560
    • ☆☆☆☆☆

    You are welcome (and thank you) 🙂

  • Author
    Posts
Viewing 6 posts - 1 through 6 (of 6 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • douglasnyangara on Foreign exchange risk management (1) Part 4 – ACCA (AFM) lectures
  • douglasnyangara on Foreign exchange risk management (1) Part 4 – ACCA (AFM) lectures
  • AnnaTeddy on Basic group structures – SPLOCI introduction and example – ACCA (SBR) lectures
  • tanyanti on Conceptual Framework – ACCA SBR lecture
  • John Moffat on Statement of Cash Flows (part b) Example 1 – ACCA Financial Accounting (FA) lectures

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy