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Chapter 7.. question 11. Page 44
Hello sir
In the bpp kit i have noticed that .. from retained earnings we deduct the movement on Fv .
Therefore using this method my answer to question 11 is as followingW3 Retained earnings
Per q 360000 100000
Movement on fv adj (12000)
(30000/5=6000×2)
Pre acq (20000)
————–
Post acq 68000
Our share 70% 47600
__________
407600But this answer is wrong as i am unable to tally the assets and liabilities in csofp. Sir can u please explain where i have gone wrong because this is the method opted in bpp kit for another question.
In the kit movement of fv adjustment is deducted from the retained earning of subsidiary (w3) and the remainder is added to other assets in csofp ie depreciable non current asset ( 30000-12000=18000) is added to other assets in csofp.
And because there is no movement in non depreciable non current asset , i have not deducted it from retained earnings.
I do not understand why in Bpp they deduct movement in fair value adjustment from retained.. and when i opt that method to solve this question , i am unable to tally asset and liabilitiesI don’t have any BPP material so I can only guess …
I don’t like your comment “In the kit movement of fv adjustment is deducted from the retained earning of subsidiary (w3) and the remainder is added to other assets in csofp ie depreciable non current asset ( 30000-12000=18000) is added to other assets in csofp.”
The full amount of the fair value adjustment should be added into the depreciable non-current assets on the CSFP
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