Consolidation Dec 2013 — OpenTuition Forums

AArooba10y ago

in this question, one of the adjustments says Polestar has recorded its investment in Southstar at the cost of the immediate cash payment; other equity investments are carried at fair value through profit or loss as at 1 October 2012. The other equity investments have fallen in value by $200,000 during the year ended 30 September 2013. Financial asset: equity investments (note (iii)) 16,000 Its treatment is done in the following way Financial asset: equity investments (16,000 – (13,500 cash consideration) – 200 loss) Can you tell me they have deducted the cash consideration? Only the equity investments have fallen in value so why reduce the amount of cash consideration?

MikeLittleTutor10y ago#1

We are told about the cash consideration that was paid on the acquisition of Southstar Credit Cash 13,500 and debit ....... where? Do you see it anywhere in the Polestar statement of financial position? It must be in there somewhere! Any ideas which line item in the Polestar statement of financial position could be the one that includes this $13,500 investment in Southstar?

AArooba10y ago#2

Could it be the equity investments? I don't see 13500 anywhere in the Polestar SOFP

MikeLittleTutor10y ago#3

Without looking at the actual question maybe you could confirm for me the amount of immediate cash payment made by Polestar I'm guessing it was $13,500 and the accountant has effected the double entry: Dr Equity Investments 13,500 Cr Cash 13,500 Is it coming clearer now?

AArooba10y ago#4

There is cash consideration in every question but they have subtracted it from the equity investments in only a couple of them.

MikeLittleTutor10y ago#5

You didn't answer my question! '...maybe you could confirm for me the amount of immediate cash payment made by Polestar' The reason that the cash is not deducted every time from equity investments is that it is not always "hidden" within equity investments Sometimes it's not hidden at all and is simply shown as a separate line item in the parent's statement of financial position But it will always be recorded SOMEWHERE within the parent's statement of financial position

AArooba10y ago#6

Sorry. The amount of immediate cash payment made by parent is 13500.

MikeLittleTutor10y ago#7

And that figure MUST be reflected within Polestar's accounting records: Dr ??????? Cr Cash $13,500 All you have to do is find which line item includes that $13,500 OK?

Sign into reply to this topic.