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hi sir ,
on year 2013 dec Polestar .
i dont understand why we have to minus the immediately cash by the other equity .
can you please explain to me ?
thx u sir .On 1 April 2013, Polestar acquired 75% of the equity share capital of Southstar. Southstar had been experiencing
difficult trading conditions and making significant losses. In allowing for Southstar’s difficulties, Polestar made an
immediate cash payment of only $1·50 per share. In addition, Polestar will pay a further amount in cash on
30 September 2014 if Southstar returns to profitability by that date. The value of this contingent consideration at the
date of acquisition was estimated to be $1·8 million, but at 30 September 2013 in the light of continuing losses, its
value was estimated at only $1·5 million. The contingent consideration has not been recorded by Polestar. Overall,
the directors of Polestar expect the acquisition to be a bargain purchase leading to negative goodwill.Financial asset: equity investments (16,000 – (13,500 cash consideration) – 200 loss) 2,300
I really am not sure what your question is – sorry 🙁
“…. why we have to minus the immediately cash by the other equity”
Try rephrasing your question, please. The treatment of which figure is confusing you and how would you have expected that figure to be treated?
i also dont know what im confusing ..
i just wonder why there is deduction for cash consideration at equity investment .Ok, let me ask my question in a different way.
I presume that you’re checking the printed solution (so am I but I can’t see where the immediate cash has been deducted from equity!)
Tell me precisely which working contains this immediate cash treatment and I’ll check it out for you and get back immediately
Yeah sir i think that is the problem .
I think is i dont understand the treatment for cash consideration .
If the question stated that parent haven’t record . Wad is the entry for cash consideration?Bevon! TELL ME THE WORKING NUMBER IN THE PRINTED SOLUTION THAT YOU DON’T UNDERSTAND!
The immediate cash payment MUST have been recorded. What makes you think that it hasn’t been?
Under answer b)non current asset
Why have to minus 13500?????Financial asset: equity investments (16,000 – (13,500 cash consideration) – 200 loss) 2,300
Because the company has other financial assets and the only entry made on the acquisition of the subsidiary was to enter the cash payment and debit the financial asset account
Why are you continuing to refuse to give me a working number? Exactly which bit of “TELL ME THE WORKING NUMBER IN THE PRINTED SOLUTION” do you not understand?
I have had to answer your post by guesswork because I can’t see what the answer has done. If I’m wrong, then I’m sorry, but you seem to be reluctant to help yourself by giving me the information that I have repeatedly asked for 🙁
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