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The answer for the NCI in SOCI = 1800.
The working (iv) said Salva’s post-acqn profit = 9500. How to get this number?
Simple question but I am lost.
Thanks in advanceFor the same question, in the exam answers they say 21,000+2,000 interest and then 23,000/2 = 9,500, but I do not understand why 2,000 is added and then divided by 2. Because the 2 million is interest on the loan 50,000*8%/2 = 2mln and after this the 2 million is divided again by 2.
If someone can clarify, It would be really helpful.Hi
Can you explain how you get the NCI in SOCI = 1800 or the number 9500? I am afraid I still can’t get the point.
ThanksNCI post-acq proft is calculated by time-apportioning the year’s profit, with an assumption that all transactions took place evenly throughout the year.
if that is the case,
NCI post-acq profit = 21m*(6/12) = 10.5m
But, in this qn, there is an expense which was incurred in the post-acq period only. This is the interest on loan 8%*5m*(6/12) = 2m.
This expense should be removed frm the year’s profit before time-apportioning, ie, to say, add back the expense of 2m. This is done so that the post-acq expense is not spread throughout the whole year.
21m + 2m = 23m. Now time apportion it
23m *(6/12) = 11.5m. this is the post-acq profit without including the interest expense of 2m. now, we need to subtract the interest expense to get the real post-acq profit. 11.5m – 2m = 9.5mhope that make some sense
plz re-read the previous post. detailed explanation is given there.
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