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Hello Sir,
How are you? I need to ask that why loan notes is deducted or added to Parents Investment and how we deal loan notes in CSFP?It’s value being given by the acquirer to the former shareholders of the acquiree in the form of a promise to pay money at some time in the future
How to deal with it? The double entry in the parent’s records will be Dr Cost of Acquisition and Cr Long Term Liability
The Cost of Acquisition Account leads us to the figure for Goodwill and the long term liability account is shown in Long Term Liabilities on the consolidated statement of financial position
OK?
Hello sir you mean that the cost of acquisition is treated as an Asset by Parent in CSFP and it is also added to Parents investment in this case? what is the adjustment in CSFP when we treat this in our working.
Cost of Acquisition is the account in the parent company records but, as with all the examples from the course notes, cost of acquisition in the course notes from Vytautas and Gediminas onwards is dropped from the scene when we start the consolidation exercise
However, we do need to know the cost of acquisition in order that we can calculate goodwill in working W2
OK?
I benefited from you explanation here Mr. MikelLittle. So I am saying thank you.
And also to Bilaliqbal, thanks for bringing this up too.
Hello Sir How are you? I need to ask that we just deal this in the working of cost investment to calculate goodwill and we do not deal it in CSFP when we do a combination of two group Financial Statements ?
Hi Bilal
You are correct – the only time that we are interested is for working W2 Goodwill
Ok Sir Mike 🙂 Thanks a lot 🙂 I will be keep in touch If I face any more trouble.
Regards
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