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profit/loss on disposal

TTrus4y ago
Fork Co owns an 80% investment in Spoon Co which it purchased several years ago. The goodwill on acquisition was valued at $1,674,000 and there has been no impairment of that goodwill since the date of acquisition. On 30 September 20X4, Fork Co disposed of its entire investment in Spoon Co details of which are as follows: $'000 Sales proceeds of Fork Co's entire investment in Spoon Co 5,580 Cost of Fork Co's entire investment in Spoon Co 3,720 Immediately before the disposal, the consolidated financial statements of Fork Co included the following amounts in respect of Spoon Co: $'000 Carrying amount of the net assets (excluding goodwill) 4,464 Carrying amount of the non-controlling interests 900 Calculate the profit/loss on disposal (before tax) that will be recorded in Fork Co's CONSOLIDATED statement of profit or loss for the year ended 30 September 20X4 (in whole $). answr:342000 Sales proceeds 5,580 Net assets at disposal 4,464 Goodwill at disposal 1,674 Less: carrying amount of NCI (900) (5,238) 342 hi sir, In the lecture video and notes the way of calculating profit/loss on disposal is totally different where,(sales proceed + NCI -Net assets- goodwill=profit/loss on disposal) but here in the question they deduct nci and add net asset and goodwil. which way should I follow sir?
P2-D2P2-D2Tutor4y ago#1
Hi, I think the answer is correct and just presented in a different format. 5,580 (proceeds) + 900 (NCI) - 4,464 (net assets) - 1,674 (goodwill) = 342 Thanks
ASalawi sayed4y ago#2
Hello Sir, Can I add something to this , what about the original cost amount which is: Cost of Fork Co’s entire investment in Spoon Co 3,720 what we have to do with that or it does it mean anything to us in this situation ,because it was put in the question to confuse us, Please clarify sir, Thanks,
P2-D2P2-D2Tutor4y ago#3
Hi, The cost is not part of the group accounts, so we do not do anything with it in the group accounts. In the individual accounts we would calculate a profit on disposal of the investment where we compare the proceeds to the cost of the investment. Thanks
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