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There is a step acquisition of Club as far as I can understand.
There are given fv of identifiable net assets on both days:
– when 40% bought on 1/4/15 $1032m and
– further 45% bought on 1/4/16 $1062m.
While accounting Diamond’s 40% of interest on 31/3/16, exam answer calculates fv of identifiable net assets separately excluding the adjusting fv (plant) figure
I would’ve used given figure $1062m instead his calculated $1052m (Sh.C. $700m + RE $293m + OCE $59m)
Why?In Shenzhen China , i cannot download or enter Opentuition.com
is there any way to download and send by email to me expecially the Notes on P2thank you.
Hi,
The key is that the answer is calculating what the accounting would have been for Club when it was a 40% associate holding, i.e. it is working out the investment in associate. This calculation would not have involved the fair value of the net assets of $1,062m as this wouldn’t have been know in doing the equity accounting, it is only known once the acquisition of the additional 45% is done, hence we use the $1,052m which is what is held in Club’s accounts.
Hope that helps.
Thanks
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