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For transaction (iv) regarding the associate, to calculate the profit on the investment in associate how come the the impairment is not deducted.
They only took (2000 x 40% ) = 800. Why ?
Are we talking here about the impairment in the subsidiary – “Although Greca has been profitable since its acquisition by Viagem, the market for Greca’s products has been badly hit in recent months and Viagem has calculated that the goodwill has been impaired by $2 million as at 30 September 2012.”
And you want to deduct the goodwill impairment related to the subsidiary from the profits of the associate – “Viagem’s investment income is a dividend received from its investment in a 40% owned associate which it has held for several years. The underlying earnings for the associate for the year ended 30 September 2012 were $2 million.”
Are you sure that this is a sensible way to approach the issue of calculating the profit share of the associate?
Hi Mike, what happened to the investment income that appeared in the pl in the question with Viagem of $500,000 ?
I can’t see it in the answer anywhere.. can you please explain..
It’s mentioned in the “statement of profit and loss for the year ended 30 September 2012” in the question. It’s difficult to comment what type of investment income it is as it’s not part of adjustments (relevant information to the question). See question, you would understand.
Investment income Viagem -500 and greca -nil.
My question is why is not not included in the consolidated statement of profit and loss for viagem for the year ended.
Thanks
“It’s difficult to comment what type of investment income it is as it’s not part of adjustments (relevant information to the question)”
Is it not point (iv) reproduced here:
“(iv) Viagem’s investment income is a dividend received from its investment in a 40% owned associate which it has held for several years. The underlying earnings for the associate for the year ended 30 September 2012 were $2 million.”
or is it me being stupid?
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