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Hello, I had a doubt in Prodigal regarding the post-acquisition reserves split.
Usually in every question I’ve done, I take the post-acquisition column’s total from the step Net assets of the subsidiary and divide it among the Parent and NCI.
Which in this question is,
Parent – 31,200*75% = 23,400
NCI – 31,200*25% = 7,800But, in the solution they’ve taken Parent – 30,200*75% = 22,650. (The revaluation surplus of 1000 has been deducted) However, the NCI calculation is the same as above.
Why is it so? Why is the revaluation surplus deducted when taking the Parent’s share?
I was stuck on this question for quite some time. Hoping I don’t get a question like this on the exam!
Hi,
We are looking at the reserves in more specific detail in this question and how they are presented on the face of the group SFP. The post-acquisition retained earnings will go to the group retained earnings working, the post acquisition revaluation surplus will go to a group revaluation reserve.
The NCI own their share of both of these reserves, and the NCI is shown as one figure on the face of the group SFP. We can therefore use the total post-acquisition movement in reserves/net assets.
Thanks
Hi,
We are looking at the reserves in more specific detail in this question and how they are presented on the face of the group SFP. The post-acquisition retained earnings will go to the group retained earnings working, the post acquisition revaluation surplus will go to a group revaluation reserve.
The NCI own their share of both of these reserves, and the NCI is shown as one figure on the face of the group SFP. We can therefore use the total post-acquisition movement in reserves/net assets.
Thanks
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