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I’m struggling to understand the idea behind computing net asset disposal and using it in computing group profit or loss on disposal.
I’ve seen your video but you didn’t really expantiate on this aspect. Can you please help with reference to Sep Dec 2016 q1? Why do we need the “net asset at disposal” and how do we calculate It?
Hi,
We need to calculate the net assets at disposal in order to calculate the group profit/loss on disposal. In disposing of the subsidiary we are no longer consolidating so we need to know what the value of the assets were when we disposed of them from the group accounts.
The difficulty is always calculating what they are as there can be several different ways. In this question we take the net assets, which are given to us at the start of the year, and add on the total comprehensive income for the nine months to the date of the disposal, as any increase in profit/comprehensive income will lead to an increase in the net assets.
Thanks
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