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Hi
i am facing some problems regarding the question of Ashanti Group.specifically i cant understand the logic behind the working of Sale of equity interest in Bochem.In disposal of share where control is retained,increase and decrease in equity is calculated by comparing the cash received and ((Net asset at disposal+unimpaired goodwill)*% of disposal)
in the answer of ashanti, calculation of Bochem’s net asset at disposal date does not include share of associate profit (2.1) and profit on disposal of Ceram (only fair value adjustment is included). Although Bochem was sold at the year end why is Bochem’s share of profit not being included in Bochem’s net asset at the disposal date?
thanks in advance!!
Same questions.
Concerned about the Decrease in NCI calculation.Here it is calculated as Change % * [Net Assets at disposal + Impaired goodwill (although kit answers say its unimpaired goodwill,is there a reason for this?) ]
Here’s a quote from the exam:-
“The carrying value of the net assets of Bochem
at 30 April 2010 was $210 million before any adjustments on consolidation”Does that not mean that the carrying value of the net assets of Bochem as at 30 April 2010 was $210 million? And does that carrying value not increase the value of Bochem’s investment in Ceram
I believe it does!
the same comment applies to Bochem’s own profits being included within the $210m
Meaow01
Problem with the interpretation of “impaired goodwill”
Does the expression mean:-
a) the goodwill left after previous impairments or
b) the amount of goodwill impaired in previous impairments
It should be interpreted as a) above
thanks for the reply,but it says carrying value of the net assets before any adjustments on consolidation and that’s why we need to provide additional depreciation then why wont we provide adjustment for income on associate?
as income from associate(30% income of Ceram) is not included in individual account of Bochem then it could be argued that net assets of Bochem as at 30 April 2010 (i.e $210 million) does not include this profit.am i right sir?
hanks for the reply,but it says carrying value of the net assets before any adjustments on consolidation and that’s why we need to provide additional depreciation then why wont we provide adjustment for income on associate?
as income from associate(30% income of Ceram) is not included in individual account of Bochem then it could be argued that net assets of Bochem as at 30 April 2010 (i.e $210 million) does not include this profit.am i right sir?
No! The income from the associate will already have been recorded – I may need to check that statement this evening if you’re not convinced!
thanks for your answer but i am still in dark!!
just tell me one think is income from associate (30%) a consolidated adjustment or not?
Here’s an extract from the examiner’s answer at the end of working W3:-
“The gain above has been calculated from Bochem’s viewpoint and therefore a portion of this gain belongs to the NCI of Bochem.
The share of the pro?ts of the associate would be 30% of a half year’s pro?t ($7m) i.e. $2·1 million and 30% of half of the gain on the AFS investments i.e. $0·9million.”
So, in fact, the year’s results for Ceram were not included but the above note tells us that the nci are taken into account when working out the value of their share of the year’s figures
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