• 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 : NCA

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Consolidation : NCA

  • This topic has 5 replies, 2 voices, and was last updated 6 years ago by MikeLittle.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • May 6, 2016 at 11:48 am #313913
    cara12
    Member
    • Topics: 21
    • Replies: 51
    • ☆☆

    Hello,

    Could you tell me why the value by which an asset is revalued down in a subsidiary is still deducted from goodwill calculation as is the value of an asset which is revalued upwards please?

    May 6, 2016 at 1:29 pm #313921
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22699
    • ☆☆☆☆☆

    Hi

    The reason is that, on acquisition, the net assets of the acquiree must be valued at fair value so, if the fair value is lower than carrying amount, we must make a deduction from the book value of net assets to arrive at the fair value of those assets

    If you remember the workings that I write on the screen you may notice that I try always to write FV of SNA @ DOA

    I try to remember to emphasise always that it’s the fair value that we must consider, not the book value

    OK?

    May 6, 2016 at 2:44 pm #313937
    cara12
    Member
    • Topics: 21
    • Replies: 51
    • ☆☆

    But let’s say that at the date of acquisition, the Land of the subsidiary is revalued upwards by $1.2m and the PPE of the subsidiary is revalued downwards by $0.8m.
    So in the goodwill calculation, both the revaluation gain on the land and the loss on the value of PPE are deducted from the goodwill calculation, why is that?

    May 6, 2016 at 7:46 pm #313966
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22699
    • ☆☆☆☆☆

    No, the $1.2m land value increase will be reflected by increasing the aggregate fair value of the subsidiary’s net assets at date of acquisition. That, in turn, reduces the value of the goodwill

    The decrease in the fair value of the PPE by $0.8m will have exactly the opposite affect

    May 6, 2016 at 8:56 pm #313973
    cara12
    Member
    • Topics: 21
    • Replies: 51
    • ☆☆

    Oh ok, thank you 🙂

    May 7, 2016 at 8:13 am #313993
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22699
    • ☆☆☆☆☆

    You’re welcome

  • 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

  • John Moffat on Time Series Analysis – ACCA Management Accounting (MA)
  • John Moffat on The use of the target cost – ACCA Performance Management (PM)
  • tello18956 on CIMA BA2 Non-Financial Performance Measurement
  • 56v647e on ACCA AB Chapter 3 – An organisation’s stakeholders – Questions
  • SwissCheese on The use of the target cost – ACCA Performance Management (PM)

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