Page 433 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Answers

Example 15.3

(i) Gain in Thin's individual accounts
$
Proceeds 40,000
Less cost of shares sold (24,000)
––––––
Gain to parent 16,000
Tax at 25% (4,000)
––––––
Post tax gain 12,000

(ii) Gain in Thin’s Group accounts
$ $
Sale Proceeds 40,000
Less
Carrying value of subsidiary disposed
Net assets of subsidiary at disposal date 12,000
Goodwill at disposal date (W1) 10,000
Less NCI at disposal (W2) (1,600)
(20,400)
––––––
Gain 19,600

(W1) Goodwill at disposal
$
Fair value of P’s investment 24,000
NCI at fair value 4,000
Fair value of sub’s net assets at acquisition (8,000)
–––––––
Goodwill at acquisition 20,000
Impairment (50%) (10,000)
–––––––
Goodwill at disposal 10,000

(W2) Non-controlling interest at disposal
$
NCI at acquisition 4,000
NCI % × post acquisition reserves (40% × (12,000 – 8,000)) 1,600
NCI % × impairment (40% × 10,000) (4,000)
––––––
1,600
––––––

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