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Im sure this. Is basic. But can u pls educate me 😉
Doa 1.1.2012
Q: Additionally, on 31 December 2012 Viagem will pay the shareholders of Greca $1·76 per share acquired. Viagem’s cost of capital is 10% per annum.
A: Deferred consideration (9,000 x $1·76/1·1)
Im confused with the 1.1
The discounting calculation is achieved by dividing the amount payable in, say, one year’s time by (1 + the cost of capital expressed as a percentage)
In a question where cost of capital is say 8% and the amount of $300 is payable in 2 years’ time, today’s value of that obligation would be 300 / (1.08)(1.08)
$30,000 payable in 3 years’ time and cost of capital is 7% would have a present value of 30,000 / (1.07)(1.07)(1.07)
In your question 9,000 x $1.76 is divided by (1.10)
Is that ok?
Yes.thank u!!! U r the best!
One more …
In the question theres an amount of say $100 impairment. In calculating goodwill. I noticed that thereis no goodwill impaired made in working2. Instead only in consolidated income statement in the expenses n nci profit adjustment.
Why is that?Hi Marilyn
I thought that I had recorded my answer to Viagem. Does my recorded answer not identify what that $100 is? If not, post again and I’ll try to look up the question
Hello good sir! I was looking for a similar explanation when i stumbled upon this entry. Where have you recorded your answer to this question? The lecture for share to share exchanged and deferred consideration is not listed in the lectures section for Chapter 8. Please let me know if I’ve overlooked something here. Will be waiting. Thank you!
Share for share exchanges are included in the mini-exercises at the back of the F7 notes – there’s no lecture on them that I remember.
If Viagem is a past exam question, I have recorded questions one, two and three – you should be able to find them on the site – maybe check in the index of the content of the F7 pages on this site and see if there’s a heading for something like “Worked examples of past exam questions”
If you still can’t find them, let me know and I’ll check for you in more detail
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