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Dear Sir,
If Question say, Holding company will pay further consideration if subsidiary’s next profit achieve certain target, should i booked up the deferred entries first regardless subsidiary future profit able to achieve that target, is it?
What if the subsidiary cannot achieve that specific target?
All entries to be reversed, is it?yes, and no
Yes, you should account for the contingent consideration as though the subsidiary were 100% certain that it would achieve the target profit, and
no, there is no reversal. the only element of reversal is that the amount that you have showed as a contingent liability becomes, as time passes into either a confirmed liability or a provision no longer required. But it’s not a reversal. The entry would be Dr Contingent Liability and Cr Retained Earnings
OK?
Dear Sir,
Dec 2014 Q3 came out this deferred consideration.
I was so happy that i had got the answer before the exam really came out.
This Dec 2014 Q3, i managed to balance up SOFP and SOPL, but i realised i forgot the last portion in SOPL,,,,Profit attributable to owners of parents and NCI. I would lost marks, right?Just one, so 99% is still a possibility
Sounds like you’ve done enough to score at least 50%
Well done
Dear Sir,
I passed my F7, 3rd attempt with 51 marks.
Luckily MCQ did not make me fail.Thank you.
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