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Sample March/June 2016 – Zanda

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Sample March/June 2016 – Zanda

  • This topic has 7 replies, 2 voices, and was last updated 8 years ago by MikeLittle.
Viewing 8 posts - 1 through 8 (of 8 total)
  • Author
    Posts
  • December 4, 2016 at 5:50 pm #353776
    azeeza247
    Participant
    • Topics: 14
    • Replies: 14
    • ☆

    Dear Sir,
    I calculated NCI for the above question using the following methods.
    NCI (Net assets in balance sheet that doesn’t belong to parent)
    Share capital = 9000
    Retained earnings (8600-1500+500-200) = 7400
    Revaluation Reserve = -2500
    Total = (9000+7400-2500) 13900×40% = 5560-520 (520 is from NCI FV minus acquired NAME by NCI)= 4680.

    I realise that if I need to get the answer in the markscheme, my retained earnings has to be 7100. Could you explain to me if my method above is correct and if so what error I’ve made and how to arrive at the correct retained earnings figure?
    Also the working is long just for 2 marks, but doing it this way makes the consolidated RE calculation much easier for me!
    Sorry for the lengthy message!
    Thanks in advance!

    December 4, 2016 at 7:09 pm #353797
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    NCI at date of acquisition:

    Retained earnings brought forward were $8,600

    Loss for the 6 months pre-acquisition were 6/12 x $(3,000) = $(1,500)

    So retained earnings at date of acquisition were $7,100

    Does that do it for you?

    December 4, 2016 at 7:13 pm #353801
    azeeza247
    Participant
    • Topics: 14
    • Replies: 14
    • ☆

    But for NCI aren’t we supposed to take the retained earnings as of the balance sheet date?

    December 4, 2016 at 7:32 pm #353816
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    It depends which nci you are calculating

    We need a valuation for nci as at date of acquisition and we need another valuation as at date of financial statements

    Which one are you looking for?

    December 4, 2016 at 8:01 pm #353831
    azeeza247
    Participant
    • Topics: 14
    • Replies: 14
    • ☆

    The question says – “prepare the following extracts form the consolidated statement of financial position of Zanda as at 31st of March 2016” (Acquisition was on the 1st of October 2015, so I believe I’m looking for the NCI as at the date of the financial statements

    December 4, 2016 at 9:00 pm #353842
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    9,000 shares x 40% x the fair value of each share – you haven’t told me the share value as at date of acquisition

    + nci share of post-acquisition results =

    40% x $(1,500) (were there any adjustments? Your post doesn’t give me any details)

    and that total will give you the nci value as at the accounting year end – subject to there being no impairment of goodwill

    December 4, 2016 at 9:19 pm #353850
    azeeza247
    Participant
    • Topics: 14
    • Replies: 14
    • ☆

    Got it! Thank you very much sir. One more question, how would I have to calculate NCI supposing they don’t value NCI at fair value and use the proportionate method instead?

    December 5, 2016 at 7:16 am #353915
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    Calculate the fair value of the subsidiary’s net assets as at acquisition date and apply the nci percentage to arrive at the nci value

    This is well covered in the video lectures

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