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Hi Mike,
Could you please give some explanation of time 6 of Travel – Dec. 2011 Q1, I am always confused with pension scheme. I saw steps in OT notes. The working steps starting two columns:
b/f F.V. of PA //////////// P.V. of FO
Could you please also redo this in above form of Traveler?
Many Thanks,
QinHi Mike,
Sill traveler’s Q, sorry for my bothering all the time, really need your instruction for revision soon.
1) The pension scheme, I fear to do this, I don’t know which figure should be put in obligate or assets or which to R.E. I am weak on this point as above. The Q says: the PV of available future refunds and reductions in future contributions was $18 million? can you explain more for this? And I don’t understand double entry:
Dr. defined benefit asset 45
Cr. current liabilities 452) when I removing sale of NCA in Group R.E., can I do as below:
removal of sale proceeds of land (64)
gain on F.V. increase of land 8Just saw answer sheet is: sale of NCA 56
3) When I add post-acq. share of D into Group R.E. of T, I hesitate whether to use 60% control or 80% control. The original purchase is 60%share, and at year end, it comes to 80% share for T in D. Can you explain more on the choice.
4) the debt instrument, why using the original effective interest rate 6.7%, not the revised one 6.3%? Any finance cost on it? Just see other paper, we are asked to do that.
5) NCI D’s part – I did right for T in C, but for T in D below are my steps included in group NIC:
My thinking is using ( F.V. of NIC@DOA:$395+NIC from post-acq share: $154X40%=$61.6+nominal Goodwill of NCI: 60×40%=$24) = $456.6+$24 to calculate the 20% part of more control. But the answer showing nominal goodwill for NIC is not included. Why? I just notice we add GW part to NA of C and D to compare with recoverable amount to calculate GW impairment. So I think the same clue here for equity movement from NCI to Parent – T.
6) adjustment to parent’s equity $8.3 to OCE, so what is Dr. what? just not see no 8.3 decreased in NCI.
Thanks,
Qin1)B, why defined benefit asset 38??? and also single line in SoFP, can I include it to NCA or financial assets? always confused with pension plan 🙁
Qin, please don’t send in six questions in one post! I am going backwards and forwards on my tablet checking your question, accessing the ACCA site for the questions and printed solutions, back to your post, back to the question ….
So much so that I have already answered your post (nearly) and then, when checking your final question, I hit the opentuition tab but hit the delete “X” by mistake and deleted the lot!
So here I go again – sadly!
Refunds and reductions are explained with an example in the opentuition notes. In the balance sheet we show (nowadays, since the revision to the IAS) just the net figure. The answer also refers to the 10% corridor – that is no longer applicable. It is improbable that the examiner is going to ask about refunds and reductions. He has done once, shortly after he wrote an article in Student Accountant – and that’s why they appear in the OT notes
If the disposal of the asset matter were in a cash flow question then, yes, I might be inclined to net them off. But there is a general principle in accounting that says there should be a minimum of netting off
When calculating retained earnings in a situation of a change in group structure then, for the purposes of working W3 calculation, we need to apply both 60% and 80% for that calculation – time apportioned of course. There are examples in the OT notes
So far as concerns the debt instrument, I quote the examiner’s own answer :- “All other debt instruments are subsequently measured at fair value. The classification of an instrument is determined on initial recognition and reclassifications are only permitted on the change of an entity’s business model and are expected to occur only infrequently. Traveler cannot measure the instrument at fair value as the objective for holding the financial asset has not changed.”
In Data, the nci is valued on a full fair value basis whereas for Captive the nci goodwill is calculated on a partial goodwill basis
For the movement calculated as “adjustment to parent’s equity” the double entry is to increase or decrease the parent’s retained earnings and decrease or increase the nci entitlement within the statement of changes in equity
OK? Let’s hope that I press send rather than the delete button!
ok, understand now. Only last one left :
Can you give double entry for equity movement for extra 8.3
Dr. NCI 228.3
Cr. OCE 8.3, Cash 220?Thanks,
QinHi, it’s given in detail at the bottom of page 9 in the ACCA printed solution to Traveler, December 2011:-
Further acquisition of 20%
$m $m
Fair value of consideration 220
NCI at 1 December 2010 395
Increase in net assets to 30 November 2011:
((1,079 + 10) – 935) x 40% 61·6
––––––
NCI 30 November 2011 456·6
––––––
Transfer to equity 20/40 228·3
––––––
Positive movement in equity 8·3
______OK?
debit NCI 228.3, credit cash 220, credit other components of equity 8.3
Hi Mike,
Just one more for Traveler – the adjustment to parent’s equity:
debit NCI 228.3, credit cash 220, credit other components of equity 8.3
1. Why in Consol, the current assets are not deducted CASH 220?
2. From the answer sheet working1, the 20% additional acquisition of NCI doesn’t consider goodwill. I refer to OP lecture (p28). It says,”what we are buying is the appropriate part of the nix’s entitlement to the subs’ assets, INCLUDING GOODWILL.” in W3B, Note there is NO ADJUSTMENT TO GOODWILL.” For me, I really confused, the goodwill should be considered or not.
Thanks,
QinHi Mike,
Please just answer my first question. I have found the answer to my second question when studying IAS 27 – Acquiring additional shares after control is obtained. GOODWILL IS NOT REMEASURED. ( not remeasured – what a powerful word 🙂
Thanks,
Qin,Coz from the Q paper, Current assets for each individual a.c. is 995, 781 and 350. When console, just sum up all of them. Maybe I am too sensitive – cash 220 has been deducted to come to 995, right?
My brain messed up yesterday 🙁
Qin
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