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Hi Mike
For ribby 6/2008- NCI at acqn they used (30% fair value of recognition) =$36m is this the proportionate method of goodwill? it doesnt state in the question?
for Zian should the share acqn profits be (2.2*0.4) , but in the solutions it states (40%*47.2= 18.8. I thought the 47.2 is the NCI @ R/D Whereas in the pass paper Rose, they did not use the NCI at R/D? Im confused.
In the question Ribby 6/2008- the residual value of plant. i have worked out the depreciation to be cv for 30/4/2010= $9.3-2.6Residual value= 6.7 less dep 1.68= $5.02 carrying value at 30.4.2011.
therefore dep movement = 3.10-1.68= $1.42. can you please guide me through this because I know my workings are wrong.
thank you
June 2008 was set BEFORE IFRS3 revised – at that date we did not include the fair value of the nci in the calculation of goodwill
The depreciation problem you face could well be because you have given me the wrong reference!
“In the question Ribby 6/2008- the residual value of plant. i have worked out the depreciation to be cv for 30/4/2010= $9.3-2.6Residual value= 6.7 less dep 1.68= $5.02 carrying value at 30.4.2011.” This is actually the question Rose!!!
Also, I don’t see any residual value in the question!
Here’s the examiner’s answer – as easy as pie!
“Overseas property
cost (30m/6 dinars) $5m
Depreciation (5m/20) ($0·25m)
Revalued amount (35/5) $7m
Revaluation surplus to equity ($7m – 4·75m) 2·25”OK?
residual value is in note 5 in the june 11 paper.
Can you please help.
thank you
note 5: rose purchased plant $20m on 1 May 2007 with an estimated useful life of 6 years. it is estimated residual value at the date was $1.4m . at 1 may 2010, the estimated residual value changed to 2.6m. the change in the residual value has not been taken into account when preparing statements as 30.4.2011
You seem to be depreciating 9.3 less residual value of 2.6 = 6.7 over 4 years. Isn’t it 3? “Rose purchased plant for $20 million on 1 May 2007 with an estimated useful life of six years. Its estimated residual value at that date was $1·4 million. At 1 May 2010, the estimated residual value changed to $2·6 million.” 1 May 2007 to 1, May 2010 is 3 years and it had an estimated life of 6 years as at date of acquisition. Your depreciation calculation of 1.68 is surely 6.7 / 4 and it should be 6.7 / 3
Does that answer it for you?
Hi so 6.7/3 ia 2.2. Therefore the dep movement is 3.1-2.2 = 0.9in the solution its 0.4.
Cost 20, residual value 1.4, to depreciate over 6 years = 18.6
depreciated for 3 years = 9.3
carrying value 20 – 9.3 = 10.7
revised residual value 2.6, to depreciate 10.7 – 2.6 = 8.1 over remaining 3 years at 2.7 per annum
But Ribby has already accounted for this year’s depreciation of 3.1 based on original estimate of residual value
3.1 – 2.7 = overcharged depreciation of .4
OK?
Hadn’t read the question carefully enough when I posted my last post – only spotted you depreciating over 4 not 3 and completely missed the fact that you had the wrong carrying value
Sorry
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