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Hi My Dear Tutor, I have some comparison questions.
Highveldt
Note 2)Included in highveldt’s investments is a loan of $60 million made to samson at the date of acquisition.Interest is payable annually in arrears.Samson paidnthe interest due for the year on 31 March 2017 but highveldt did not receive this until after year end.Highveldt has not accounted fornthe accured interest.Hedra
Note 1)Salvador accepted a $50 million 8% loan from Hedra at the date of its acquisition.I always deduct this loan note from investment and simultaneously cancel loan note i mean deduct also from loan note of both samson and salvador.
But in case of highveldt loan note made to samson and samson paid interest to Highveldt.Why we only add it over gre not nci?it says samson paid?This can be explained by highveldt gave loan note to samson that is why interest will only belong to GRE?
Coming to second question if salvador gave aby interest to hedra would nci share tashareto consideration?
Also another case, in the case of parentisn it says the issue of $100 10%loan note for every shares acquired.
Wheb i face such cases i usualy charge it investment and as non-current liability of loan note.“I always deduct this loan note from investment and simultaneously cancel loan note i mean deduct also from loan note of both samson and salvador.”
You worry me when you say things like “I always ….”
Life isn’t like that!
“Why we only add it over gre not nci?”
Because the omission is in the fact that Highveldt has not recorded yet the interest in transit but Hedra HAS recorded the payment
When that interest is received by Highveldt the entry in Highveldt will be:
Dr Cash
Cr Investment IncomeHow has that affected the Hedra retained earnings? How has it affected the nci?
“Not at all” is the answer to both those questions
“Coming to second question if salvador gave aby interest to hedra would nci share tashareto consideration?”
Why should the nci get any of this loan interest? How much money did the nci lend to Salvador? (I’ll leave you to answer those two questions)
“Wheb i face such cases i usualy charge it investment and as non-current liability of loan note.”
When such a loan note is issued as part of the acquisition consideration, the double entry in the parent’s own records will be:
Dr Investment in Subsidiary
Cr Long Term loanIf that’s what you meant then, yes, that’s ok
OK?
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