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Hi Mike, I’m struggling with one point in the question about increase of $15m of the land in Stem on the consol SFP. I see the revaluation has been debited to PPE on the asset, and $2.5m credited as part of exchange reserve, but what about the remaining $12.5m revaluation surplus on the CSFP?
When I did it, I put the $12.5m as part of ‘other components of equity’. So what is the correct double entry for the consol adjustment for this please?
Thank you!
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Hi Ren!
I think you may get a little bit confused regarding this part of the question.
Because in the mentioned case the full fair value adjustment (75 million dinars equivalent with 15 million USD at the reporting date) is in the Stem books (PPE and other components of equity), the asked revaluation surplus is coming from the revalution of one of the Rose land mentioned at part 3. The owner of that land is Rose, it says it operates in the same country as Stem. So it is not in Stem books.I hope now it is more clear for you.
Best regards and good luck!
Bernadett
Hello Mike, Ren and bviragos,
attempting Rosie paper (June 2011) I noticed that the calculation of further 10% interest (from 70 to 80%) is particular and however different than that used in the Question Grange (10 % is not calculated on the net assets at the reporting date but on NCI at acq. date + post acquisition profit of NCI)
In Grange the result of the calculation is based on the difference between consideration (for the 10%) and the 10% of net assets at reporting date (which was the date of the further 10% increase).
Whilst Grange (dec 2009) is in my exam kit (with the note “adjusted”) I had to download Rosie from ACCA web site, is it probably to be adjusted ?
I hope that’s the case otherwise I haven’t understood the transactions between equity holders ..
thanks
Marvin
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Hi Marvin,
Look here the answers for Grange, I don’t know what is it in your exam kit. https://www.accaglobal.com/content/dam/acca/global/PDF-students/2012/p2int_2009_dec_a.pdf
It is the same working as Rosie’s.
You have to calculate the NCI value at date of purchase of further investment and calculate the value of the appropriate portion (in case of Grange 20% of 40%, in case of Rosie 10% of 30%) compared it to the fair value (or further cost) of the investment and the difference goes to the equity, because the company have already obtained the control.I hope it is more clear now.
Best regards, and good luck
Bernadett
thanks bviragos, good luck to you too.
I have already made the check you mentioned.
The method adopted is reasonable of course (correct). I’m wondering whether the one I have in the Kaplan’s exam kit is another permitted way to do the calculation (the reference is 2012 kaplan exam kit, working 4 pg. 186)
.. but the outcome is not the same
Mike, any suggestions ? could the latter method be correct as well ?
Thanks again
Marvin
Hi
In my workings, we acquire the extra %age of the fair valued net assets + the appropriate value of the goodwill.
Now, I can see that that will not be the same as the nci fair value at date of acquisition + their share of post-acquisition profits – their share of any goodwill impairment (it WILL be the same if the nci had originally been valued on a proportional basis)
Just thinking about the conceptual side of this, it does have merit to compute the value acquired from the nci in this way. I suppose I have to g back and see which way the examiner prefers. But it’s too late now for tomorrow!
thank you Mike anyway,
However the method mentioned by bviragos sounds more robust…
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