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Example 2 – Group SFP incl. Associate – Chapter 25

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  • July 27, 2021 at 9:25 am #629554
    Aayush98
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    Hi,

    I was working through this example 2 and in the answer in the notes on page 167 of the notes, I have seen the FV is 400. I am unable to get this figure since my calculation is $1850m FV of net assets – $1800 (Net assets according to draft financials) = $50m as the FV with a extra depreciation of $50m/10 years remaining useful life = $5m.

    The answers suggest $400m for FV and $80m for extra depreciation.

    Kindly note this affects all other workings and hence need further clarification on the same.

    Please confirm why the figures are not $50m for FV – PPE and not $5m for Depreciation in the answer.

    Waiting to hear from you soon.

    Kind regards,

    Aayush Shah

    August 18, 2021 at 8:48 am #631907
    Aayush98
    • Topics: 11
    • Replies: 3
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    Hi,

    Kindly advise on the question above.

    Thank you.

    Aayush Shah

    August 19, 2021 at 10:12 pm #632267
    P2-D2
    Keymaster
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    Hi,

    If the FV of net assets is $1,850 million at acquisition and the equity share capital is $1,000 million and the retained earnings $450 million then the difference is $400 million – 1,000 + 450 +400 = 1,850

    Thanks

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