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Ask the Tutor ACCA FR

investment in associate

HHesham9y ago
Dear MR Mike, there are 2 issues for the associate : First: at chapter 11, (at individual books, recognizing "dividend income" in the Statement of Profit or Loss and Other Comprehensive Income)" But, at the consolidated statements, it is recognized only "the group’s share of the associate’s results" . Is that Contradiction?, it is not understood ? as, the revenue at the parent individual books will be different from which at the consolidated statements. the second issue : The profit resulting from the 'inter-entity' transactions, we must eliminate only the group share of that profit regardless there is URP or not, is that right? Thanks
MikeLittleMikeLittleTutor9y ago#1
Income from an associate's dividends is not included in any entity's revenue figure No, we eliminate only the group share of the UNREALISED profits
HHesham9y ago#2
"we eliminate only the group share of the UNREALISED profits" So,that elimination has an impact on the inventory ? in other meaning, should the inventory (as an asset) be reduced by the eliminated part of URP amount ? that for the transaction with associate .
MikeLittleMikeLittleTutor9y ago#3
The consolidated retained earnings decrease (working W3) and the Investment in Associate decreases (working W5A)
HHesham9y ago#4
Thank you My greetings to you .
MikeLittleMikeLittleTutor9y ago#5
You're welcome
MikeLittleMikeLittleTutor9y ago#6
No The premium paid on acquisition ( it's not called 'goodwill') belongs entirely to the investor (the parent) so when we calculate working W3, consolidated retained earnings, we need to take our share of the associate's post acquisition retained and then deduct the impaired goodwill at the end of that working In working W5A, investment in associate, the calculation is: cost of investment plus our share of associate's post acquisition retained less goodwill impaired since acquisition ... but we don't call it goodwill! OK?
MikeLittleMikeLittleTutor9y ago#7
Did you read the last post from me? Here's the relevant part again "The premium paid on acquisition ( it’s not called ‘goodwill’) belongs entirely to the investor (the parent) so when we calculate working W3, consolidated retained earnings, we need to take our share of the associate’s post acquisition retained and then deduct the impaired goodwill at the end of that working"
MikeLittleMikeLittleTutor9y ago#8
You're welcome
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