• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

New! Lectures for ACCA AAA September 2022 Exams are now available >>

New! BPP Books for ACCA September 2022 Exams are now available, get your discount code >>

Pumice Co- NCI Calculation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Pumice Co- NCI Calculation

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • April 23, 2021 at 12:06 pm #618592
    maeveh999
    • Topics: 3
    • Replies: 0
    • ☆

    Hi I am trying to do the calculation for NCI but I cannot understand why the NCI does not have a share of the depreciation from the Fair Value Adjustment. The answer I would have got was NCI at Acq 3000 + Post Acq Profits 160 – Depreciation 200 – Impairment 80 = 2880

    The question is:
    On 1 October 2005 Pumice acquired the following non-current investments:
    – 80% of the equity share capital of Silverton at a cost of $13.6 million
    – 50% of Silverton’s 10% loan notes at par
    – 1.6 million equity shares in Amok at a cost of $6.25 each.
    The summarised draft balance sheets of the three companies at 31 March 2006 are:
    Pumice Silverton Amok
    $’000 $’000 $’000
    Non-current assets
    Property, plant and equipment 20,000 8,500 16,500
    Investments 26,000 nil 1,500
    46,000 8,500 18,000
    Current assets 15,000 8,000 11,000
    Total assets 61,000 16,500 29,000
    Equity and liabilities
    Equity
    Equity shares of $1 each 10,000 3,000 4,000
    Retained earnings 37,000 8,000 20,000
    47,000 11,000 24,000
    Non-current liabilities
    8% loan note 4,000 nil nil
    10% loan note nil 2,000 nil
    Current liabilities 10,000 3,500 5,000
    Total equity and liabilities 61,000 16,500 29,000
    The following information is relevant:
    (i) The fair values of Silverton’s assets were equal to their carrying amounts with the exception of land and plant.
    Silverton’s land had a fair value of $400,000 in excess of its carrying amount and plant had a fair value of $1.6
    million in excess of its carrying amount. The plant had a remaining life of four years (straight-line depreciation) at
    the date of acquisition.
    (ii) In the post acquisition period Pumice sold goods to Silverton at a price of $6 million. These goods had cost Pumice
    $4 million. Half of these goods were still in the inventory of Silverton at 31 March 2006. Silverton had a balance
    of $1.5 million owing to Pumice at 31 March 2006 which agreed with Pumice’s records.
    (iii) The net profit after tax for the year ended 31 March 2006 was $2 million for Silverton and $8 million for Amok.
    Assume profits accrued evenly throughout the year.
    (iv) An impairment test at 31 March 2006 concluded that consolidated goodwill was impaired by $400,000 and the
    investment in Amok was impaired by $200,000.
    (v) No dividends were paid during the year by any of the companies.

    April 24, 2021 at 1:29 pm #618724
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6119
    • ☆☆☆☆☆

    Hi,

    Yes, the depreciation on the fair value adjustment would be part of the calculation. I’m not 100% sure that your FV at acquisition and post-acquisition profits are correct at first glance.

    Thanks

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate

If you have benefited from OpenTuition please donate.

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • John Moffat on Discounted Cash Flow Further Aspects, Lease versus Buy – ACCA Financial Management (FM)
  • ben920331 on Discounted Cash Flow Further Aspects, Lease versus Buy – ACCA Financial Management (FM)
  • John Moffat on The Statement of Financial Position and Income Statement (part d)
  • Viktoriia.Yanchuk on The Statement of Financial Position and Income Statement (part d)
  • John Moffat on The management of receivables – Simple settlement discount – ACCA Financial Management (FM)

Copyright © 2022 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy