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Hi
Does anyone know where the figure of $776m in Decany retained earnings come from? It was $750m in the question, I’m guessing $25 is from the dividend from Ceed but theres $1m left?
Thanks
hi
Sorry, I can’t help you yet – not really looked at the December 2011 exam closely.
Maybe someone could give you a clue from the forum
Hi
The total RE of Decany = 750( per q)+25 ( div received from Ceed)+ 3 profit made from selling Rant to Ceed on paper( 98 paid to Rant and 95 was the initial cost ) – 2 ( restructuring cost)
Hi Mike,
Just dig out this thread cos I have Q for Decany.
For item 1, $98m payable in cash from C to D to acq R, and 98m will be loaned on a long-term unsecured basis to R.
1. Why in Rant’s a.c., long-term loan is 106, it seems 12+94. Where the 94 comes from? Why not this 98m.
2 And from SUE888’s answer of Decany’s RE, 25 is div received, but the Q said C will pay 25, not yet paid. So the div receivable can also be included in RE?
Thanks,
Qin12 + 98 – 4 mortgage = 106
Yes, the dividend is included in both the retained earnings and in the Decany receivables
Sir plz explain
how is the following criteria met in case of decany :1. the new parent obtain control of the original parent or entity by issuing euity instrument in exchange for existing equity instruments of the original parent or entity
2.asset and liabilities of the original group and the new group are the same immediately before and after reorganisation .
3. the owners of the original parent or entity ( DEcany) before the organisation have the same relative or absolutist interest in the net assets of the original group and the new group immediately before and after the reorgansiation“1. the new parent obtain control of the original parent or entity by issuing euity instrument in exchange for existing equity instruments of the original parent or entity”
Where a company acquires another through a share for share exchange, that answers your first question. so we give shares in us (the new parent) to the shareholders in S (the new subsidiary) so now the former shareholders of the subsidiary are the new shareholders of us, the new parent. OK?
“2.asset and liabilities of the original group and the new group are the same immediately before and after reorganisation .”
The entire takeover has been achieved by us, the new parent, giving pieces of paper (share certificates) to the former shareholders of S in exchange for their share certificates in S. How much cash changed hands? How have the assets and liabilities of S changed at all?
“3. the owners of the original parent or entity ( DEcany) before the organisation have the same relative or absolutist interest in the net assets of the original group and the new group immediately before and after the reorgansiation”
When I issue (say) 2 shares in me for every 3 shares that they own in S, their relative power remains the same. Two for every three (or 16 for every 23, or whatever!) their relative strength remains the same
Is that ok?
ok Sir i was just trying to equate the total figures before and after reorganisation for assets and liabilities for the three companies to just check that cz in the answer they say that the criteria has been met.
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