Article on consolidation process part two

amounts except fora piece of land with a carrying amount of GH¢2,000 which had

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• NOTE: Since the asset involved is apiece of land, no depreciation adjustment will arise.

amounts except fora piece of land with a carrying amount of GH¢2,000 which had a fair value of GH¢2,500. This fair valuation adjustment has not yet been reflected in the separate financial statement of Happy Ltd. Solution: From footnote (ii there is no fair value adjustment since fair values of Comfort Ltd’s assets and liabilities approximated their carrying amounts. In the case of Happy Ltd, there is apiece of land with a carrying amount of GH¢2,000 and a fair value of GH¢2,500. Since, the fair value exceeds the carrying amount, there is a positive fair value adjustment in this case of GH¢500. In consolidation, the amount of GH¢500 is to be added to PPE in the Consolidated Statement of Financial Position. The same amount is to be added to net assets on the date of acquisition for purposes of computing goodwill. Further, fair value adjustment is added to the computation of NCI. Workings Debit (GH¢) Credit (GH¢) Property, plant & equipment 500 Revaluation Reserves 500 NOTE: Since the asset involved is apiece of land, no depreciation adjustment will arise. JAY: Why and how should I SPLIT THE EQUITY & RESERVES OF THE INVESTEES? KO: STEP 5: SPLIT RESERVES AND STATED CAPITAL OF INVESTEES INTO PRE, Download 0.61 Mb. Share with your friends: