Many thanks for this. I have a very slightly different approach for calculating the updated NCI value at the date of the additional 30% acquisition in Freeman- it might be helpful for others to understand the treatment. I start the same, with the value of 850K. I then take 40% of the change in net assets as per the individual Balance Sheet (so 40% x 2.42 m-1.58 m = 336 and finally (where I take an alternative approach) I deduct the NCI share of the additional amortisation of the non-recognised brand name over the 4 years since the initial acquisition (so, a deduction of 10k per year x 4 years x 40% = 16k). The overall change them comes to the 320K (336k less 16k) as per the solution but for some students it may be a little easier to understand.
Why Investment in Freeman $1,250,000 is deducted? Should it not be deducted from current asset as Whitetaker purchased additional 30% equity for consideration $1.25 mil?
company has done: dr investment in freeman 1250k (which is wrong) cr cash 1250k (correct) correct is: dr nci 877.5k dr oce 372.5k cr cash 1250k therefore, adjustment needed: dr nci 877.5k dr oce 372.5k cr investment in freeman (to correct the error)
TThank You sir
Many thanks for this. I have a very slightly different approach for calculating the updated NCI value at the date of the additional 30% acquisition in Freeman- it might be helpful for others to understand the treatment. I start the same, with the value of 850K. I then take 40% of the change in net assets as per the individual Balance Sheet (so 40% x 2.42 m-1.58 m = 336 and finally (where I take an alternative approach) I deduct the NCI share of the additional amortisation of the non-recognised brand name over the 4 years since the initial acquisition (so, a deduction of 10k per year x 4 years x 40% = 16k). The overall change them comes to the 320K (336k less 16k) as per the solution but for some students it may be a little easier to understand.
Very Useful tips
Wish to perform the same in the Paper😊
Thank you - made it look so easy ..still Tom Clendon 🙂
Why Investment in Freeman $1,250,000 is deducted? Should it not be deducted from current asset as Whitetaker purchased additional 30% equity for consideration $1.25 mil?
company has done:
dr investment in freeman 1250k (which is wrong)
cr cash 1250k (correct)
correct is:
dr nci 877.5k
dr oce 372.5k
cr cash 1250k
therefore, adjustment needed:
dr nci 877.5k
dr oce 372.5k
cr investment in freeman (to correct the error)
@@dareldchua5061understood, thank you😁