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In the ret earnings workings,why havent they taken the inc in FV on consideration paid to Ass which has now become a sub subsidiary.
And what is the reversal of gain on rev of investment of 30? Where did it come from?In part b) of this qs it says that the impairment allocated to PPE will be same under both methods of valuing NCI,how is that possible?
Thanks
In relation to your second Q, the fair value of Caller was revalued from $280 as at 31 May 2012 to $310 on 31 May 2013. This $30 needs to be reversed on consolidation, therefore it’s deducted in retained earnings for y/e.
In part b) the note emphasis is on the fact that PPE IMPAIRMENT will be the same, no matter whether the nci is valued on a full basis or on a proportionate basis. The difference in the bases affects the allocation of the goodwill impairment, but the PPE impairment is done according to the proportionate shareholdings no matter what the basis for the nci investment valuation
I’m looking at the ACCA’s own printed solutions to the question and at the top of page 12 is an explanation of the $30 gain and the reason for its reversal
The increase in the fair value of the 14% investment in Caller will have been correctly accounted for – it wasn’t an associate, it was just an investment. The increase of $30 is explained in the previous paragraph of this post
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