- This topic has 2 replies, 2 voices, and was last updated 7 years ago by
.
- Posts
I noticed that I have wrong idea when calculations is to be made on wk 3. Until today that I realize details .
The Dec F7 paper 2017 ,
When calcuting the post – acq ,
All asset including FV adj + RE of the Subsidiary net asset are used to reduce the reporting net asset of the sub.We must add net asset to the sub reporting RE and then deduct from pre – acq net asset at acquisition except share capital and share premium or do we also include share premium?
The question was that inventory FV was $3.6m which had a cost of $3m but only 10% of this inventory remains of the subsidiary. RE at DOA was $34m and the draft SOFP of the subsidiary, revaluation surplus was $4m and RE was $36.5m share capital , $60m where the parent own 60%.
Wk 3
Re of P was 210m
Purp (because parent sold the goods) was $ 250k
Discount unwound 8% of 23,996 = $1920
P’ share 80% of S post acq RE = 1920* 80%= 1568Sub’s RE
RE. = $36.5m
Re surplus $4m
Inventory = 10% of 600 = 60
Pre – acq = $38600
Total post acq = $40560- $38,600 = $ 1960.Should there be share premium , are we to add it or not just like we do not add share capital too?
Also, purp was not deducted from NCI , was it because the parent sold the goods? And if it was the subsidiary, could we have apportion the 20% of NCI for the unrealized profit?
Because I can see that only the Parents deducted the Purp .
That is when looking for post acq , all net asset except share capital and share premium are excluded ? Only inventory remaining , RE, rev surplus , depr and non depr asset are all added at reporting and then deduct pre -acq of sub.
I’m not sure what’s happening in this working of yours …
Sub’s RE
RE. = $36.5m
Re surplus $4m
Inventory = 10% of 600 = 60
Pre – acq = $38600
Total post acq = $40560- $38,600 = $ 1960.”Treat share premium EXACTLY the same as you treat share capital
If it’s the parent that has sold assets involving a pup, then the adjustment is in the parent’s records … and therefore there is no affect on the nci (because the acronym nci is an abbreviation for non-controlling interest and that non-controlling interest is the outsiders’ interest in the subsidiary)
There are two distinct ways of setting out working W3
There’s my way (which is the way that involves working W3 as the appropriate working for consolidated retained earnings) and …
… there is the Kaplan (and possibly also BPP) way that looks at net assets “then” and net assets “now” and the difference is post-acquisition retained earnings
If you’re going to tackle it the way of Kaplan, then, sure, list out the net assets / shareholders’ funds in columnar form both for date of acquisition and date of consolidation
Do you include share capital and / or share premium? Yes … or no!
But if you include in one column, you must also include in the other
If you exclude in one column, you must also exclude in the other
Personally I prefer my approach that you will see consistently applied throughout all my videos and worked examples
OK?
- The topic ‘CoSFP’ is closed to new replies.