When we usually calculate FV of net assets we make 3 columns At acq | Reporting date | Post Acquisition
Whenever S's assets fair value are below carrying amount we put negative figures in the At Acquisition column and reporting date column but the solution for the question below is different
Question-At the date of acquisition the fair values of Savannah's (Subsidiary)
assets were equal to their carrying amounts with the exception of Savannah's land which had a fair value of 500K below it's carrying amount; it was written down by this amount shortly after acquisition and has not changed in value since then.
My answer:
FV adj
At Acquisition- (500)
Reporting date-(500)
Post Acq- Nil
Kaplan Solution:
At Acquisition- (500)
Reporting date-Nil
Post Acq- 500
This is what confuses me. Thank you :)