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note : Chapter 1 Example 1

Forums › ACCA Forums › ACCA SBR Strategic Business Reporting Forums › note : Chapter 1 Example 1

  • This topic has 3 replies, 2 voices, and was last updated 15 years ago by Anonymous.
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  • April 15, 2010 at 9:26 am #43533
    unicorn
    Member
    • Topics: 2
    • Replies: 2
    • ☆

    I do not understand the answer:
    W2a profit split
    for the year per question 24,000
    Less TNCA profit (20,000)
    4,000
    3,333 667

    In calcualtion of Net assets @DOA, 10 months profit should be 20,000, why is 19,333

    April 15, 2010 at 12:30 pm #59250
    Anonymous
    Inactive
    • Topics: 0
    • Replies: 53
    • ☆☆

    This is to work out Goodwill so you’re trying to find the company value AT acquisition.

    Annual profit of £24k less the internal £20k TNCA = £4k for the year (to the group)

    This profit of £4k needs to be split to see which bit relates to the pre-acquisition (10months over the 12 months)
    Getting the £3333

    Some of the inventory was worth £16k more than valued at acquisition.
    So there is £16k more value in the company at acquisition.

    Hence £3333 and the £16k = £19,333 current value this year compared to their figures.

    That’s how I am understanding the answer (Had to read it a few times)

    April 15, 2010 at 1:02 pm #59251
    unicorn
    Member
    • Topics: 2
    • Replies: 2
    • ☆

    Thank you very much, Egrek. I did not realise that the profit for the year $24 include the intra-group sale of PPE before. Now I see it.

    April 15, 2010 at 1:05 pm #59252
    Anonymous
    Inactive
    • Topics: 0
    • Replies: 53
    • ☆☆

    🙂 I only noticed it on the 2nd read.

    But then I thought that was the bit you were happy with, so had ignored it the first time around!

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