CSFP

Hi my DEAR Tutor, I have a question

————————————————————- Laimonas ——–Kristine
——————————————————————$’000——– $’000
Non-current assets
investment in Kristine————————————– 50
other ————————————————————23——— 16
Current assets————————————————- 36——— 64
Total assets—————————————————–109——— 80
$1 Equity shares———————————————– 60———- 20
Retained earnings———————————————- 40———- 50
Current liabilities————————————————– 9———— 10
Total equity and liabilities ————————————–109———– 80

Laimonas has proposed a dividend of $16,000 Kristine has proposed a dividend of $10,000 Both of the above were proposed before the year end, but not adjusted for. Laimonas acquired 90% of Kristine’s share capital 4 years ago when the balance on Kristine’s retained earnings was $30,000.
The value of the nci shareholding at the date of acquisition was $5,500

Net assets of Kristine——AD————–DR———–Post acquisition period
SC——————————20000 ———-20000————nil
RE——————————30000———–40000———–10000

cost of invesment——–50000
NCI at FV—————————-5500
net identifiable asset————-(50000)
goodwill——————————5500
impairment(5500*80%)———–(4400)
Revised goodwill———————1100

GRE–38040
RE of Laimonas-40000
Share of Laimonas(20000*90%)-18000
Impairment(4400*90%)——–3960
Laimonas didivdend pay—-16000

Kristines dividend pay is inside of 20000,that is why

NCI at date—7060
NCI at FV—-5500
NCI share(20000*10%)-2000
impairment(4400*10%)-440

In your calculation why U have got NCI at DAte 6060 ?need explanation?
Thanks in advance

| QUOTE August 16, 2017 at 11:51 am

MikeLittle

Keymaster
“RE——————————30000———–50000———–20000”

This line in your post is incorrect – it takes no account of the dividend of $10,000 that has been proposed by Kristina so post acquisition RETAINED earnings are only $10,000 and not $20,000 as you have written

I agree with u i have not made any adjustments but i face following problems

“RE——————————30000———–40000———–10000”

this part is confusing I see you take into consideration dividend receivable in GRE calculation but not NCI calculation. I think 10000 should have NCI share and NCI should be 7060 but not 6060 I can not see logic behind it.By the way your consolidation is really different from Bpp and Becker test bank i have never faced such kind of examples in my life.Really your these two examples can not let me understand this exercise.

GRE–38040
RE of Laimonas-40000
Share of Laimonas(10000*90%)-9000
Impairment(4400*90%)——–3960
Laimonas didivdend pay—-16000

dividend recevivable (10000*90)–9000-this part

Coming to NCI Part, if Kristine pays dividend it will have Nci share
NCI at date—6060 if we take into dividend pay by sco except for post acquisition of 10000 retained earnings it will be 40000
NCI at FV—-5500
NCI share(10000*10%)-1000
impairment(4400*10%)-440

dividend receivable 10000*10=1000