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NCI Question

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › NCI Question

  • This topic has 5 replies, 2 voices, and was last updated 7 years ago by MikeLittle.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • November 13, 2015 at 7:08 pm #282226
    michael
    Member
    • Topics: 23
    • Replies: 39
    • ☆☆

    Hi Mike,

    I wonder if you could help with this question:

    A acquires 70% of B.
    Value of NCI at acquisition £105,000
    Fair Value of a building is £250,000 higher than carrying amount with 40 years life remaining
    B’s Retained earnings increase £300,000 in 1 year.

    What amount should the NCI appear in CSoFP?

    Thank you

    November 14, 2015 at 5:42 am #282243
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22714
    • ☆☆☆☆☆

    $193,125 BUT ONLY IF the acquisition of B took place on day 1 of the accounting year and no dividend had been paid / proposed by B (you haven’t given me full information!)

    November 14, 2015 at 12:53 pm #282311
    michael
    Member
    • Topics: 23
    • Replies: 39
    • ☆☆

    Yes that’s the right answer, (no dividends and 1 full year)

    The bit that is confusing me is, in Chapter 7 example 11, for w3 you have the full fair value increase included (less 2 years depreciation)

    However in the question above, only the depreciation would be included in w3. Could you help clarify this for me please?

    Thanks.

    November 14, 2015 at 3:34 pm #282346
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22714
    • ☆☆☆☆☆

    In working W3, in the top section, we have the retained earnings as at today

    In the lower section we have retained earnings as at date of acquisition

    In your question, as at today we would show “fair value adjustment $250,000, Depreciation on fair value adjustment $6,250” and in the bottom section we would show “fair value adjustment $250,000”

    So, you see, the only difference is the depreciation.

    In fact both Kaplan and BPP show just the change ie just the depreciation (sometimes) but I prefer to show both – as at now and as at date of acquisition

    OK?

    November 14, 2015 at 4:59 pm #282365
    michael
    Member
    • Topics: 23
    • Replies: 39
    • ☆☆

    Yeah, so simple now. Thanks a lot, had been stuck on that all weekend.

    November 14, 2015 at 5:13 pm #282371
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22714
    • ☆☆☆☆☆

    Glad to have been able to help 🙂 – now you can enjoy the week ahead!

  • Author
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