- This topic has 3 replies, 2 voices, and was last updated 7 years ago by
.
- Posts
Why the post acquisition revaluation surplus of $600 at year end is not included in calculation of Subtrak’s retained earning? However, NCI calculation include their share of revaluation surplus?
(Please answer as soon as possible)Retained earnings Plastik Subtrak
Per question Parent: 6,300 Subsidiary:3,500
Less: pre-acquisition(1,500 + (2,000 × 3/12)) (2,000)
Goodwill impairment (500)
Unwinding of discount on deferred consideration (1,800
(a) × 10% × 9/12) (135)
Depreciation on FVA (100)
PURP (600,000 × 25/125) (120)
Total Parent:6,045 Subsidiary: 900
Share of Parent in sbusidiary (900 × 80%) 720
Total Group R.E: 6,765Non-controlling interest
NCI at acquisition 4,500
Share of post-acquisition retained earnings (900 × 20%) 180
Share of property revaluation gain (600 × 20%) 120
NCI Total 4,800“(Please answer as soon as possible)” !!!!!!!
I ALWAYS answer as soon as possible so your request does not sit nicely with me 🙁
Does the answer not show a separate line entry for a Revaluation Reserve? therefore keeping revaluations separate from retained earnings … as you would need to do in practice
In practice this is important because(for public entities) retained earnings qualify for the title of “Distributable Profits” whereas a Revaluation Reserve is non-distributable
OK?
Please respond as soon as possible!
*SORRY FOR WRITING AS SOON AS POSSIBLE”
In Consolidated statement of Profit or loss, total revaluation gain is 2100 (1500 of parent as given in question and 600 for subsidiary revaluation surplus at year end.
Following is part of question
“At the date of acquisition, the fair values of Subtrak’s assets and liabilities were equal to their carrying amounts with the exception of Subtrak’s property which had a fair value of $4 million above its carrying amount. For consolidation purposes, this led to an increase in depreciation charges (in cost of sales) of $100,000 in the post-acquisition period to 30 September 20X4. Subtrak has not incorporated the fair value property increase into its entity financial statements.The policy of the Plastik group is to revalue all properties to fair value at each year end. On 30 September 20X4, the increase in Plastik’s property has already been recorded, however, a further increase of $600,000 in the value of Subtrak’s property since its value at acquisition and 30 September 20X4 has not been recorded.”
But as per workings of solution for finding group retained earning and NCI, this 600000 is not added in calculation of subsidiary retained earnings. If this 600000 is added to subsidiary R.E, so this would change group retained earnings?
“But as per workings of solution for finding group retained earning and NCI, this 600000 is not added in calculation of subsidiary retained earnings. If this 600000 is added to subsidiary R.E, so this would change group retained earnings?”
I’ve already told you that this 600 revaluation increase is reflected in the separate line called Revaluation Reserve
Here’s an extract from the printed solution …
“Revaluation surplus (2,000 + (600 x 80%)) 2,480”
OK?
- The topic ‘Group retained earning calculation and NCI.’ is closed to new replies.