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Limited liability company

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Limited liability company

  • This topic has 3 replies, 3 voices, and was last updated 6 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • January 26, 2015 at 10:20 am #223771
    Alexa
    Member
    • Topics: 8
    • Replies: 1
    • ☆

    Wallace, a limited liability company acquired 60% of the voting share capital of Bruce on 1 February 20X8.

    You are presented with the following information for Wallace, a limited liability company, and its subsidiary, Bruce. The income and expenses of Bruce accrued evenly over the year.
    Statements of profit or loss for the year ended 31 October 20X8
    Wallace Bruce
    $’000 $’000
    Profit before tax 16,406 10,300
    Less: Income tax expense 3,700 2,100
    Profit for the year 12,706 8,200

    Statements of financial position as at 31 October 20X8
    Wallace Bruce
    $’000 $’000
    Non-current assets:
    Tangible 29,860 14,895
    Investment 9,000 0
    38,860 14,895
    Current assets
    12,010 11,697
    50,870 26,592
    Ordinary shares
    26,000 5,000
    Retained earnings
    14,145 15,210
    40,145 20,210
    Current liabilities
    10,725 6,382
    50,870 26,592
    (1)

    Wallace purchased its 60% of Bruce’s 10 million $0.50 nominal value ordinary shares on 1 February 20X8 for $1.50 per share. This was the market value of the shares at this date.
    (2)
    At 1 February 20X8 the retained earnings of Bruce were $9,060,000.
    (3)
    The fair value of the non-controlling interest in Bruce was determined using the market value share price.

    What is the total consolidated profit for the year in the consolidated statement of profit or loss for the year ended 31 October 20X8?

    50870+26592*6/12-(10000*0.5+10000)= 49166 (Is this the answer?)

    What should the tangible non-current assets figure be in the consolidated statement of financial position as at 31 October 20X8?

    29860+14895*6/12= 37307.05 (Is this the answer?)

    Unfortunately, I do not any option for answers.

    Thank you in advance!

    January 26, 2015 at 10:28 am #223775
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54660
    • ☆☆☆☆☆

    I have no idea how you are getting your consolidated profit.

    Wallace made a profit of 12,706 and Bruce made a profit of 8,200. So you need to take Wallace’s profit and then add their share of Bruce’s profit since acquisition.

    Non-current assets is simply the total of the two – there is no logic in apportioning them.

    (There really is no point in attempting questions for which you do not have answers. You must get a Revision Kit from one of the ACCA approved publishers. The whole point in attempting questions is to be able to learn from your mistakes when checking the answers.
    You cannot expect us to provide the answers to all the questions in your book.)

    July 24, 2018 at 9:57 am #464456
    aygunjafar
    Member
    • Topics: 1
    • Replies: 1
    • ☆

    Mr John Moffat Sir can you please explain how to find Bruce’s profit since acquisition? I couldn’t find it

    July 24, 2018 at 4:04 pm #464499
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54660
    • ☆☆☆☆☆

    Please read the last paragraph of my answer in 2015 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Limited liability company’ is closed to new replies.

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