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Dear Mike.
please refer to the Opentuition F7 note page 50 Example 3.
My textbook which i referring to is Kaplan F7 that sticks to the old style, but awkwardly, the answer is a little bit different between your way and the textbook’s way.
If you don’t mind, please see my working for Example 3 in page 50 that you’ve already explained.
(i) CV at Transfer period 10,000 (Deduct this figure from CRE)
….. Depn to Reporting…….5,000 (Deduct this figure from NCA)
….. CV to Reporing………… 5,000 (Deduct this figure from Subsidiary net)This part is the same way as you taught me, so no problem.
but, there is one more step which is different to your way, because they require me to do the step for the net asset at the acquisition period in Subsidiary. please refer to below the calculation.
…………………ACQ………………..REPORTING…………..POST ACQshare………..120k…………………120k
EARNING…..275k……………….. 600k……………………..325k
PURP ………………………………… 5k ……………………….5k
net asset…….395k …………………………………………….(post ACQ)330kthis is a different part comparing with what you taught.
the point is that Post Acquisition figure is different to the figure you calculated if i add one step that is learned from the text book.In your way, post acq is 325k. in the textbook way the figure is 330k.
that’s why i’m so distracted.
the way to figure out the good will is the same as yours.
(W4) Consolidated Retained earning which shows different figure owing to the post acq.
……………………………………………….. Linas………………………………. Asta
per q…………………………………………500k ………………………………….600k
purp………………………………………….(10k)
………………………………………………… 490k
post ACQ …………………………………………………………………………..330k
share ………………………………………..198k………………………………….60%
Goodwill……………………………………..77kCRE ………………………………………….765K
this is the CRE figure under the textbook way>> 765 K
in your way, the figure is 767K.
please help me….. i’m begging you..so struggling to figure out….
Moreover, could you please explain the entires where the seller is the subsidiary when it comes to Transfer of non current asset.
in my mind, if the seller is a parent.
DR retained earning (parent)
CR property and equipment
CR retained earning (Subsi)but in the note, just simply written like
DR Retained earning
CR Non-current Asset.even thought we must deduct the depn from the NON CURRENT Asset in consolidation.
so please show me the entries when the seller is Subsidiary.
these are the two questions that i’d like to ask you sir.
please please help me
Regard.
Han“share………..120k…………………120k
EARNING…..275k……………….. 600k……………………..325k
PURP ………………………………… 5k ……………………….5k
net asset…….395k …………………………………………….(post ACQ)330k”The $5,000 adjustment for the excess depreciation should be shown as a adjustment in the SELLER’S records – so show in Linas and NOT in Asta
This is what I wrote to you 3 days ago:
“Which entity made the sale? The parent or the subsidiary?
So which retained earnings are adjusted for the net pup?
Can you take it from there?”
That answers your first question
“Moreover, could you please explain the entires where the seller is the subsidiary when it comes to Transfer of non current asset.”
Same entries – but this time they are recorded in the subsidiary’s records (this answers your second question!)
“DR retained earning (parent)
CR property and equipment
CR retained earning (Subsi)”I have no idea where you are going with this entry!
Probably better for you to break these adjustments down into two separate parts
On the sale:
Dr Retained earnings $10,000 (Seller)
Cr TNCA $10,000 (Seller … although which entity this goes through is immaterial for this part of the journal)On consolidation:
Dr TNCA $5,000 (Seller … although which entity this goes through is immaterial for this part of the journal)
Cr Retained earnings $5,000 (Seller)The NET adjustment as at date of consolidation is therefore:
Dr Retained earnings $5,000 (Seller)
Cr TNCA $5,000 (Seller … although which entity this goes through is immaterial for this part of the journal)OK?
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