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Hello
In note 2 , there is mention of a $14 mil gain. In the answer this is debited to the p & l since it is being removed. My question is , what is the other side of that entry?
https://www.accaglobal.com/content/dam/ACCA_Global/Students/prof/p2/P2%20INT/d16_hybrid_p2int_q.pdf
https://www.accaglobal.com/content/dam/ACCA_Global/Students/prof/p2/P2%20INT/d16_hybrid_p2int_a.pdf
Hi,
The $14 million is the profit in the individual company accounts, which is replaced by a group profit on disposal based on substance over the legal form. The other side of the entry will therefore be the recognition of the group profit or loss on disposal, including the removal of the net assets, NCI and goodwill.
In the exam you’d not be required to deal with the other side of the entry thankfully as it is far too complicated, even at this level.
Thanks
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