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Unwinding discount (Runner Co)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Unwinding discount (Runner Co)

  • This topic has 2 replies, 2 voices, and was last updated 10 months ago by Aynur02.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • August 2, 2024 at 11:10 pm #709106
    Aynur02
    Participant
    • Topics: 17
    • Replies: 18
    • ☆

    Sir based on this information which is from kaplan exam kit

    On 1 April 20X4, Runner Co acquired 80% of Jogger Co’s equity shares when the retained
    earnings of Jogger Co were $19.5m. The consideration consisted of cash of $42.5m paid on
    1 April 20X4 and a further cash payment of $21m, deferred until 1 April 20X5. No accounting
    entries have been made in respect of the deferred cash payment. Runner Co has a cost of
    capital of 8%. The appropriate discount rate is 0.926.(at the year end is 31 March
    20X5)

    I calculate deferred consideration and unwinding discount like this:
    Deferred consideration: 21,000 × 0.926= 19,446
    Unwinding: 19,446 x 8% = 1552
    total current deferred liability: 21,002

    but in the book, the amount of unwinding is 1556 and find like this way: 21,000 – 19,446

    My solution way always give me correct answer and i don’t catch why in here the answer is different

    August 9, 2024 at 9:28 pm #709384
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    I think that it will be rounding or that 8% x 19.446 is 1.55568 = 1.556

    August 11, 2024 at 11:03 am #709504
    Aynur02
    Participant
    • Topics: 17
    • Replies: 18
    • ☆

    oh that my bad, sorry, i got it thanks

  • Author
    Posts
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