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Hi Tutor, I have question.Could you help me please?
Question has been taken from BPP test bank page number 174(MOCK EXAM)On 1 October 20X2, Paradigm acquired 75% of Strata.
Paradigm Strata
Retained earnings/(losses)-at April 20X2-19200 (4000)
for the year ended 31 March 20X3——– 7400 80001)At date of acquisition, Strata produced a draft of profit or loss which showed it had made a net loss after tax of $2million at that date.Paradigm accepted this figure as the basis for calculating the pre-and-post acquisition split of Strata’s profit for the year ended 31 March 20X3
What amount should i recognize at acquisition date and date of reporting and its difference(PAP-post acquisition period)?
By the way, I am solving CSFP by choosing Becker method because BPP method is kind of complicated that is why i say AD DR and PAP like in Becker method.
If the year’s profit figure is $8,000 and the pre-acquisition figure was $(2,000) loss, then the post acquisition result must have been $10,000 profit
If you follow this link …
https://opentuition.com/acca/f7/acca-f7-revision-kit/
you’ll find on the Opentuition home page for F7 the revision lecture for paradigm where I work through the entire question on the screen
NB If PAP is the abbreviation for the post-acquisition period, what’s the abbreviation for the pre-acquisition period? I know, don’t tell me … it’s PAP isn’t it 🙂
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