Consolidation

This topic has 3 replies, 2 voices, and was last updated 8 years ago by P2-D2.

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May 29, 2018 at 7:13 am #454546
gargakh
Member
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Hey Chris,

First of all, I thank you for all the hard work you have putted in to explain this subject.

Can you please help me with the consolidation question appeared in December 2014 exam (Joey). I am finding it very difficult.

Regards,
Akhil garg
May 30, 2018 at 11:31 am #454859
P2-D2
Keymaster
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Hi,

Thanks for the kind comments, they’re always appreciated and put a smile on my face.

Could you please let me know exactly what it is with the question that you do not understand as I’m unable to go through the entire question on the forum.

Look forward to hearing your queries.

Thanks
May 30, 2018 at 5:32 pm #454906
gargakh
Member
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Hello Chris,

Greetings!!

Thanks for the reply.

Can you help me with the contingent liability part in that is mentioned in note 2 of the question?

I didnt understand its treatment.

Why are we deducting (1) from the calculation of goodwill and why are we adding 5 to the retained earnings as it is still a liability?

Regards,
Akhil garg
May 30, 2018 at 10:00 pm #454978
P2-D2
Keymaster
- Topics: 4
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Hi,

On consolidation we recognise the contingent liability in the group accounts at fair value and so this will reduce the net assets at acquisition.

The change in the contingent liability is then recognised through profit or loss.

Thanks
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