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Ex. 1 Ausra vs Danute
Can you please explain again the retained earnings b/f
On Danute when the Parent bought 75% of Danute
R.E before any adj was 60,000 from the information and the sub has 124..Deductions of 60 from 124 as brought forward figure means what? Earnings to date of acquisition was 5 months (5/12 * ? what figure )= 10,000.
Question 2, An inventory value of $800,000 had a fair value of $1m . Inventory were all sold at year end .
Answer : kaplan said inventory Adj will be $200 and will be added to cost of sales ,
Why is it 200 when the fv is $1m .Example from Ausra where the fv of inventory was 12,000 , this adj was exactly 12,000 in the Fv adj of the subsidiary element . Was it because there was no value of inventory as at when fair value was 12,000?
Please, explain why $1m -800= $200 was the adj. figure from kaplan
Both examples show that all inventory was sold but I just want to know the differences of both statements.
Thanks in anticipation!For the 5 months R.E you could ignore since it was 24000 was the actual normal profit 5/12*24000
Inventory in Ausra was (say) $600,000 but was undervalued by $12,000 so should have been $612,000
So the fair value adjustment is an increase of $12,000 as at date of acquisition and in increase in the cost of sales for the post-acquisition period
“Question 2, An inventory value of $800,000 had a fair value of $1,000,000
Inventory were all sold at year end”
The equivalent figures in Ausra and Danute were (say) $600,000 and $612,000
Answer : kaplan said inventory Adj will be $200,000 (Ausra $12,000) and will be added to cost of sales
Why is it 200,000 when the fv is $1,000,000″
Why in Ausra is it $12,000 when fair value is (say) $612,000?
Because $200,000 ($12,000) is the ADJUSTMENT to get us to the fair value
OK?
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