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in opentuition lectures in chapter 8 ex 3 ,while calculating the share of post acquistons earnings of the subsidiary in retained earnings calculation of the group……
the caluculations were 80% x (130 divide by 4.3)4.3 was the closing rate
but in working 13 of bubble….. shouldnt the calculation be like this?
60 % x 34 divide by 9.5(which is the closing rate ) =2.147
and then the loss of 7.5 of loan should be
60 % x 7.5 divide divide by 8.5 (which is the average rate ) =(0.529)which will give us share of post acquistions in tyler of 1.617
but the calculation in the last line of working 13 gives us 1.9
why the have taken 60% of 26.5 divide by 8.5 ?shouldnt the post acquistion profit of 34 be divided by 9.5…like how you did in chapter 8 of ex3 ,where you used the closing rate ? and then the loss of 7.5 divided by 8.5 ……Hi,
The model answers in the ACCA past exams use a different approach to what I’ve used and hence you will get different answers.
The method that we use is a short cut and is designed to make it easier for you.
Thanks
sir in chapter 8 of foreign currencies in ot notes….if you look at the answer at the back in w5
in example 3 ,it didnt convert dinars 80 % x 130 to dollars and so the answer at the back is wrong i guess, but in the lectures as i have mentioned above you divided by the closing rate of 4.3 and got 24.2 ,
but i read somewhere that the post acquisition profits of subsidiary , should be converted at the AVERAGE rate which is 4.0 in example 3 ….so did you make an error by converting at 4.3 instead of 4.0 in the video lectures ? if you did make an error ,then my above issue would be solved in bubble q1.ANOTHER QUESTION REGARDING NCI
and also when calculatng the nci in ex 3…in your lectures , or if you look back in ot answers in the back , the nci at cost + its share of post acquisition profit which comes to 146 is divide by 4.3 which is the closing rate
but if you look in the model answer of w.14 nci in BUBBLES , the nci at cost is divided at the relevant date at date of acquisition (220 divide by 8) and then the post acquisition
of 26.5 divide by 8.5 and then the rest of the impairment and exchange loss…..BUT WHAT YOU DID IN EX 3 YOU DIVIDED THE WHOLE ANSWER OF 146 BY THE CLOSING RATE OF 4.3 INSTEAD OF BREAKING IT DOWN LIKE HOW THE MODEL ANSWER IS regarding the nciplease tell me which way is correct ,
thankssorry , i refreshed my page now and saw your answer after i posted another question regarding nci ,
these issues can make a student spent hours on a part of question , as we dont know what is correct and what isnt
and is my answer of 1.617 above be correct ?
and i also hope its the same regarding nci
thanks
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