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I’m in chapter 10 of the Mini Exercises (goodwill) on # 13.
I understand everything in the answer in the back except the 100 that is deducted from the 4700. I believe it has something to do with depreciation but i cant figure out how it is calculated.
I’m sure there is a simple answer and this may be a stupid question but someone please help 🙁
The loss for the year is $4,700 but involved in that is the $100 depreciation on the fair value adjustment and that only applied for the post-acquisition period
We’re trying to find the retained earnings figure as at date of acquisition
I’m assuming that you’re happy with the brought forward amount of $16,600 so all we now need is the results for the first 6 months of the year
That loss of $4,700 is deemed to accrue evenly through the year unless otherwise indicated and here we can see that an expense of $100 relates ONLY to the post acquisition period
So the results that HAVE accrued evenly are $4,600 loss of which $2,300 was the position as at date of acquisition
Better?
Incidentally, if you post on this page “Ask ACCA Tutor”, I will reply to you so there’s no need for an impassioned plea “I’m sure there is a simple answer and this may be a stupid question but someone please help ”
And I’m not ‘someone’ – I’m Mike!
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