Page 457 - SBR Integrated Workbook STUDENT S18-J19

Answers

Example 1 – continued

(W1) Group structure

P

6/10 = 60% 25%

S A

(W2) Net assets

Acquisition Rep. date
$m $m

Share capital 10 10
Retained earnings 2 7

Other components of equity – 4
Fair value adjustments (bal fig) 6 6
Depreciation (6m/10 years) – (0.6)

–––– ––––

18 26.4
–––– ––––

The total reserves movement is $8.4 million ($26.4m – $18m). Of this, $4
million relates to other components of equity and the remaining $4.4
million relates to retained earnings.

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