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Wiley acquired 80% of Coyote on 1 January 20X8. At the date of acquisition Coyote had a building which had a fair value $22 million and a carrying amount of $20 million. The remaining useful life was 20 years. At the year end date of 30 June 20X8 the fair value of the building was $23 million.
While calculating the Revaluation gain (Post Consolidation), BPP has ignored the depreciation aspect : Means revaluation gain would have been 1.55 ( 23-(22-(22/20*6/12)). But in the solution given as 1 (23-22
How it will be ?
Without the question in front of me, this is a guess!
Is it maybe because Coyote hasn’t recorded the fair value increase in its own records?
However, I’m leaning towards your solution.
Is this a past exam question or is it a BPP self-made question?
Sorry for crashing this post! I’ve been stuck at this question since this morning as well but have moved on because I knew the answer was wrong after I had asked you. But would the accounting treatment be different had the subsidiary NOT recorded the fair value in its own financial statements?
Here is the full question:
Wiley acquired 80% of Coyote on 1 January 2008. At the date of acquisition coyote had a building which had a fair value $22 million and a carrying amount of $20 million. The remaining useful life was 20 years. At the year end date of 30 June 2008 the fair value of the building was $23 million.Coyote profit for the year to 30 June 2008 was $1.6 million which accrued evenly throughout the year.
Wiley measures non controlling interest at fair value. At 30 June 2008 it estimated that goodwill in Coyote was impaired by $500,000.
What is the total comprehensive income attributable to the non controlling interest at 30 June 2008?
Options:
A. $250k
B. $260k
C. $360k
D. $400kAnswer:
Profit to 30 June 2008 $800,000
Additional depreciation (2m/20m x 6/12) = (50,000)
Goodwill impairment ($500,000)
Revaluation gain $1,000,000
Total $1,250,000
NCI share 20% = $250,000This question was a BPP self made question- I couldn’t find it anywhere online.
when a parent company sales goods to associate so does the purp be added to the cost of sales in profit or loss and inventory in sfp
Okay thanks 🙂 to satheesh90 and mike, apologies if I was rude- have got a bad habit of jumping right into things without thinking.
Complicated – no problem this time – I appreciate having the question in front of me
My way … deduct the FULL pup from the associate’s retained earnings, then take our share of those retained earnings to consolidated retained earnings in working W3
Working W5A – the investment in associate on the statement of financial position will automatically be reduced by out share of that pup
Sir.. hope now you are in a position to answer my query . why revaluation is 1 Million only.. why it is not 1.55 ( 23-(22-(22/20*6/12)).
Thanks Mr. Complicated
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