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equity movement – example 2 of ch4 on OT notes

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › equity movement – example 2 of ch4 on OT notes

  • This topic has 16 replies, 2 voices, and was last updated 11 years ago by MikeLittle.
Viewing 17 posts - 1 through 17 (of 17 total)
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  • April 16, 2014 at 5:15 pm #165478
    QIN
    Member
    • Topics: 63
    • Replies: 176
    • ☆☆☆

    Hi Mike,

    Could you pls help as above – Sergijus+Indra, S bought further 25% share from Nci of I at a cost of $500,000. I am confused about this $500,000. Who did pay for it? When I study the statement of changes in Equity, why $500,000 being deducted from Nci, not S?

    And b/f of RE for S is 1,450,800, how it come?

    Thanks,
    Qin

    April 16, 2014 at 7:42 pm #165486
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    We increase the nci entitlement by $39,445 and then pay them $500,000. They are “giving up” their entitlement to $461,555 net worth of the subsidiary in exchange for $500,000. So they make a “profit” on the deal of $39,445

    Having credited them with that profit, we now pay them the full $500,000

    Retained earnings at the end of the year are shown as $1,380,000 and that is after crediting retained earnings with the earnings retained this year of $70,000. Therefore the brought forward amount must be $1,380,000 less $70,000 = $1,310,000 for Sergijus

    the same principle applies the the figures used in the Indra calculation

    ok?

    April 16, 2014 at 8:51 pm #165496
    QIN
    Member
    • Topics: 63
    • Replies: 176
    • ☆☆☆

    I understand the bf of RE now $1,310,000. Thanks.

    But how $461,555 comes out? and $500,000-$461,555=$38,445. Can you show me your details of working?

    Thanks,
    Qin

    April 16, 2014 at 10:09 pm #165497
    QIN
    Member
    • Topics: 63
    • Replies: 176
    • ☆☆☆

    One more question: example 4 of chapter 4 Raimonda.

    W3B gain in group, why value of NCI @DOD is $141,125, if it is 20%of NA@DOD, it should be $713,625×20%=142,725.

    Any why after selling 60% of D, R’s share in D is 32%?

    Could you pls give some details on it. Thanks, these examples are really good to practice. I found my brain stops working when doing them.

    Thanks,

    Qin

    April 17, 2014 at 7:02 am #165500
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    $461,555 is my calculation error when I was posting the reply. The workings show that the “adjustment to parent’s equity” amount is $39,445 and the amount payable for the increased acquisition is $500,000.

    In my haste to answer you, I deducted $39,445 from $500,000 and arrived (wrongly) at $461,555. It should of course be $460,555

    I need to check the question Raimonda so I shall get back to you on that.

    However, re your final point, Raimonda sold 60% of her holding in Dainius. Before disposal, she held 80% of Dainius and 60% of 80 is 48

    Thus her holding in Dainius fell by 48 from an 80% holding down to a 32% holding

    Is that ok?

    April 17, 2014 at 4:37 pm #165558
    QIN
    Member
    • Topics: 63
    • Replies: 176
    • ☆☆☆

    Got u. The 60% sold out from 80% control.

    Still confused on your note: “adjustment to parent’s equity” amount is $39,44″, in the answer note it is 60,445. I am stuck on this step.

    Thanks,
    Qin

    April 18, 2014 at 10:36 am #165583
    MikeLittle
    Keymaster
    • Topics: 27
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    • ☆☆☆☆☆

    Hi Qin

    In my copy of the notes, downloaded from this site just two minutes ago, the figure for the adjustment to parent’s equity is repeatedly shown as $39,445 (see pages 216 W3, 216 W3B, 217 W4A and 217 Statement of Changes in Equity)

    ?

    OK?

    April 18, 2014 at 3:51 pm #165601
    QIN
    Member
    • Topics: 63
    • Replies: 176
    • ☆☆☆

    Hi Mike,

    In all pages you are talking about “the number of adjustment to parent’s equity” is still 60,445. I also downloaded again just a few mins ago. Anyway, I understand the concept you are talking about now after I read your answer to me again. S paid 500k to gain this 25% from nci, nic making a profit on it. For S, they concluded 80% past-acq profit from I, so it’s fair. Thanks. 🙂

    April 18, 2014 at 5:05 pm #165603
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    Now I’m really worried! I checked the P2 notes just minutes before I posted and the figure in the answer that I read was clearly $39,445.

    ????????

    Something I shall need to check with Admin when he returns from his Easter break!

    April 18, 2014 at 8:55 pm #165610
    QIN
    Member
    • Topics: 63
    • Replies: 176
    • ☆☆☆

    Thanks, can you give step by step how $39,445 comes out? coz in my note, I can’t figure it out, but $60,445 is very clear shown.

    Thanks,
    Qin

    April 21, 2014 at 3:31 pm #165814
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    The value of the 45% nci at date of our original acquisition is 676,000 per working W2 Goodwill

    The value attributable to the nci post acquisition is their 45% x (1,620 – 1,280) = 153,000 and we are acquiring 25 parts of that 45% ie 5/9 x (676,000 + 153,000) = 460,555.

    In order to finance this, we are paying the nci 500,000 to acquire 460,555 worth of assets. Hence the adjustment to parent’s equity of 500,000 – 460,555 = 39,445

    OK?

    April 23, 2014 at 1:23 am #165952
    QIN
    Member
    • Topics: 63
    • Replies: 176
    • ☆☆☆

    Got u, year end post acq. R.E.820- @DOAR.E.480=340, for 45% NCI. OT notes now is wrong. right 🙂

    April 23, 2014 at 10:23 am #165974
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    How are the notes wrong?

    April 23, 2014 at 8:53 pm #166035
    QIN
    Member
    • Topics: 63
    • Replies: 176
    • ☆☆☆

    it’s on page 216, The value attributable to the nci post acquisition is their 45% x (1,620 -84–1,280).

    Thanks,

    Qin

    April 24, 2014 at 9:15 am #166073
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    In working W3B “nci value at date of original acquisition 45%(1620 – 1280)” should not show the “45%(1620-1280)”

    I cannot see in my downloaded copy of the notes, page 216, the line you have quoted “The value attributable to the nci post acquisition is their 45% x (1,620 -84–1,280).” In particular, I don’t see where the “-84” is in the notes

    However, if you are now happy where the figures are from, then that’s ok

    April 24, 2014 at 2:15 pm #166127
    QIN
    Member
    • Topics: 63
    • Replies: 176
    • ☆☆☆

    thanks, I understand the point now 🙂

    April 24, 2014 at 5:00 pm #166173
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    Ok, good

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