PICANT

Good evening sir.

Past exam question June 10. (20marks)

On 1 April 2009 Picant acquired 75% of Sander’s equity shares in a share exchange of three shares in Picant for every two shares in Sander. The market prices of Picant’s and Sander’s shares at the date of acquisition were $3.2 and $4.5 respectively.

…………………………Picant………………….Sander
Equity$1………………25000…………………….8000
SP……………………….19800……………………..nil.

I know that this refers to the share exchange, and share exchanges are followed by two entries SC and SPremium entries.

but at the end, they don’t consider any other share exchange, as i checked the answer sheet.

it is stated at the same as the above given question.

In consolidated SOFP,

…………………………Picant…..
Equity$1………………25000…..
SP……………………….19800.

No change in SC and SP.

i looked over all the single words in this question,but i couldn’t find the reason why they just jot down like that.

One more question.

when the P company transfers the Plant to the Subsidiary

in my head, i start to draw the three factors such as COS+, Dr CRE or Subsidiary net asset and Cr NCA.

as in SOPL, i need to subtract the purp from total cos and in SOFP, in the middle of working (2) or (5) this amount must be deducted as Purp and from NCA.

so these three factors automatically are engraved in my mind as i meet this kind of question.

but as i asked you earlier, some questions in Kaplan revision book followed the rule like the difference of depreciations between them goes into many parts.

However, you reassure me that it is old style that was used 3 or 5 years ago.

so just to be sure, the above explanation about entries i did is correct?

the last question is that i tend to use abbreviated terms like SOFP SOPL IIA(Associate blabla) and so on

sometimes i write just “deferred consideration” as just “Deferred”

there are okay sir?

please help me to confirm the three questions