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Dear Mike,
In the question Ashanti acquire 70% of Bochem. (1.5.X3), then dispose 10% at end of reporting period 30.4.X5
Bochem acq 80% of Ceram (1.5.X3) and then “On 1.Nov.X4 Bochem dispose of 50% of the equity of Ceram”. ” After the disposal Bochem san still exert significant influence”I understand that after Bochem dispose 50% of Ceram then the remaining with Bochem is 30% of Cerma and Ceram is associate of Bochem.
When caculating profit for the year for Bochem to get NCI figure the share portion of associate is accounted for (30% of profit of Ceram).However following the bpp solution in the Group Ashanti Statement of P/L & OCI there is one line of the share profit of the associate with the amount same as such in Bochem’s
I got confuse here. How is the relation between Ashanti and Ceram. Ceram is Associate of Bochem and also of Ashanti? Please help me.
Hi
There is a note in the official answer that states that the 2.1 share of Ceram’s results has been calculated from Bochem’s viewpoint.
I think that I would have calculated from Ashanti’s viewpoint (the group’s share of the associate) but that looks like it could get tricky with all those percentage holdings changes!
Meant that i can caculate investment in associate in Ashanti Group based on 21% (70%x30%)?
What if Bochem interest in Cerem is only 20%? How we deal with group report?
By the way, for this P2 often charge depreciation cost into admin expense, not cost of good sold? Is that right?
Looking for your help. Thank you.If examiner says “include depreciation in administrative expenses” then …… include depreciation in administrative expenses! Don’t ask – just do it
This examiner is the guy that sets the rules of the trial that you face. Play by his rules. If he says “write the exam entirely with your left hand” then write it with your left hand
“What if Bochem interest in Cerem is only 20%? How we deal with group report?” then the Ashanti / group’s share will be 70% of 20% = 14%
Does that answer it?
Ok thanks for your help.
The depr issue is just to confirm with you only as our tutor said that normally depr charge will be inclued in adm expense if question say nothing. So if there instruction given by the question then sure I did not concern.
The same applies to goodwill impairment – we’re often told to include it within cost of sales. But if we’re not told, where do you put it? Personally I would show it as a separate line item within PorL
Your tutor is only trying to be thorough and suggest to you where you COULD include the figure. I don’t believe that there is any hard and fast rule – “….and if the examiner doesn’t say then you MUST include it within administrative expenses or otherwise you will lose a mark”
To the very best of my knowledge and belief, such a rule lies beyond the boundaries of common sense.
But don’t tell your tutor I said that!
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