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Dear Mike,
First of all I would like to thank you for your lectures. I find them very helpful for paper F7.
In relation to the above mini exercise question – Mini Exercise Questions – Goodwill Q.3 Patricija & Sergejus – I have two queries I would appreciate you could help me with.
1. Subsidiary R.E as at DOA. as per answer it shows 4.000.000$
However I don´t see the nominal value as at DOA of 1 $ in Sergejus.2. RE B/f as per answer it shows 3.500.000$
However as per question it states that the R.E for the y/e 30.04.2010 were $6.5m.I thought the only figure that needed to be adjusted to the mid-year acquisition was the profit for the year. 6/12 x$3m
Please could you explain how you get to $3.5 m R.E b/f please?
Thank you very much.
Kind regards,
Isabel
Hi
I don’t understand your first point – are you referring to retained earnings or share capital?
Your second point – retained earnings per the question at the end of the year were $6,500,000 and, of that amount, $3,000,000 were achieved and retained during this year of acquisition.
Therefore $3,500,000 must have been the retained earnings as at the start of the year and then the proportion of this year’s $3,000,000 is also pre-acquisition
Ok?
Let me know again about your first query
Dear Mike,
Thank you for your prompt answer. In relation to query 1, yes I meant share capital for Sergejus.
Many thanks and kind regards,
Isabel
The nominal value of a share (in practice!) in the UK is £1 unless stated otherwise
I am so used to accepting that nominal value is 1, whether it be 1€, 1$ or 1£ that I occasionally (thankfully!) omit to identify that it is 1.
Generally, you should accept that, unless stated otherwise, it’s 1
Ok?
That’s great Mike. Thank you very much for your answer. I’m studying online from Spain and sitting the exams in Ireland! ????
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