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Hello
I would like your assistance regarding question 1, Bubble. The links are shown below.
question:
https://www.accaglobal.com/content/dam/ACCA_Global/Students/prof/p2/P2%20INT/d15_hybrid_p2int_q.pdfanswer:
https://www.accaglobal.com/content/dam/ACCA_Global/Students/prof/p2/P2%20INT/p2int-2015-dec-a.pdfMy queries:
On page 14 of the answer, goodwill of Tyslar working, the rate of 8.5 was used for the impairment, but the rate given in the question at the date of impairment, 31 Oct 2015 was 9.5.
Working 13 mentions 1.9 as the share of post acq profits for tyslar but in w3, the diff in retained earnings is [32.2-3.1] x 60%/8.5=2.05
Working 2 mentions that the $5m should be cancelled from both financial asset and non current liability. I do not understand why it has to be taken out of the LIABILITY since its a loan given from parent to sub.
Working 6 uses the rate of 8% for net interest cost. Why wasn’t the closing rate of 6% used?
Thanks in advance.
Hi,
Impairments are expensed through profit or loss and so are translated at the average rate.
The post acquisition retained earnings in the working are 34 less the adjustment for the loan of 7.5, which gives 26.5.
The loan gives rise to an asset in one company’s set of books and a liability in the other, so we need to remove both on consolidation as it is an intra-group loan.
We always use the interest rate at the start of the year as this is the rate that it given to us by the actuary that is used during the year. It is one of the actuarial estimates that gives rise to the remeasurement component that we calculate which goes through OCI.
Thanks
ummm…why was the cash contribution made into the defined benefit scheme of $6m reversed in retained earnings?
ummm…because in the question it says that they’ve expensed the cash contributions and they shouldn’t have been.
Hi
Can you please explain how the cost of investment of
salt is $110m? I’m having $200m for 80%.
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