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Hi Sir,
I need some help. I facing problem for F7 December 2010 question no 1.
I don’t understand why the Available for sale investments have deduct $800(Consideration).
Is this Loan note or other equity reserve?Thanks
The $1,800 given in the question relates to some “other investments include some available-for-sale investments that have increased in value by $300,000 during the year. The other equity reserve relates to these investments and is based on their value as at 30 September 2009.”
But the $1,800 also includes the loan note that was issued on the acquisition of the subsidiary. (80% * 5,000 shares / 500 * $100 loan note = $800 loan notes. But these $800 don’t belong with other equity investments. They belong in the cost of investment account and are used in the calculation of goodwill
OK?
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