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On 1 January 20X1KL acquired 75% of the equityshares of PQ. Goodwill arising on the acquisition was $480,000. On 31 December 20X3 KLsold the full investment of PQ to XY Groupfor $2,000,000. On this date the net assetsof PQ were $1,340,000 and the non-controlling interests stood at $410,000.
What is the gain on disposal to be recognised in the consolidated statement of profit or loss of KL?
Suggested Answer: A
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35 comments · newest first
BE
Beata
11 months ago
$635,000? That seems a bit off, not sure about that one.
ED
Eden
11 months ago
Definitely going with option C, seems right to me!
AR
Armanda
11 months ago
Wait, how does the non-controlling interest factor into this?
IN
India
12 months ago
I think it should be $660,000 based on the numbers given!
LA
Lashunda
12 months ago
The gain on disposal is calculated as sale proceeds minus net assets.
BR
Brandee
1 year ago
I believe the goodwill plays a role too, but I'm confused about how it factors into the final gain on disposal.
JA
James
1 year ago
This question seems similar to one we practiced where we had to consider non-controlling interests. I think that might affect the gain calculation.
TA
Tamar
1 year ago
I think we need to subtract the carrying amount of the investment from the sale proceeds, but I can't recall the exact formula we used.
GL
Glory
1 year ago
I remember we discussed how to calculate the gain on disposal, but I'm not sure if I got the net assets part right.
TA
Tasia
1 year ago
I'm feeling confident about this one. Consolidation questions are my strong suit, and I've practiced similar problems before. I'll work through this methodically and double-check my work.
HU
Hubert
1 year ago
This seems tricky, but I'm going to give it my best shot. I'll work through it step-by-step and make sure I understand each calculation.
LO
Lorrine
1 year ago
Hmm, I'm a bit unsure about how to approach this. I'll need to review my notes on calculating gains and losses on disposal of subsidiaries.
MA
Madelyn
1 year ago
This looks like a straightforward consolidation question. I'll need to calculate the gain on disposal based on the information provided.
MO
Mozell
1 year ago
Okay, I think I've got this. I just need to calculate the total consideration received, the net assets disposed of, and the goodwill associated with the investment. Then I can determine the gain.
GL
Glendora
1 year ago
I bet the person who wrote this question was just sitting in their cubicle, cackling maniacally, thinking 'let's see if they can figure this one out!'
MA
Martha
1 year ago
D) $635,000
CH
Charlena
1 year ago
C) $660,000
NI
Nikita
1 year ago
A) $590,000
FL
Fletcher
1 year ago
Okay, time to put on my accounting superhero cape and solve this puzzle! Let's do this, one step at a time.
RO
Rodolfo
1 year ago
Yes, I agree. It should be A) $590,000.
CY
Cyril
1 year ago
I think it's A) $590,000
AD
Adelina
1 year ago
That makes sense. So, $2,000,000 - $1,340,000 = $660,000. But we also need to consider the non-controlling interests of $410,000. So, $660,000 - $410,000 = $250,000. Therefore, the gain on disposal should be $590,000.
LY
Lynsey
1 year ago
A) $590,000
AM
Amber
1 year ago
I think it's A) $590,000 because we need to calculate the gain on disposal by subtracting the net assets of PQ from the selling price to XY Group.
RO
Rosendo
1 year ago
A) $590,000
DA
Darell
2 years ago
Oh man, this is a real brain-teaser. I sure hope I don't mess up the math and end up with the wrong answer. That would be a total 'KL' on my part.
TR
Tresa
2 years ago
Alright, let's see. The selling price is $2,000,000, the net assets are $1,340,000, and the non-controlling interest is $410,000. Looks like I need to do some serious number-crunching here.
GR
Gracia
1 year ago
D) $635,000
IS
Isidra
1 year ago
C) $660,000
DA
Daniel
1 year ago
B) $180,000
CH
Cherry
1 year ago
A) $590,000
DO
Dorsey
2 years ago
Hmm, this seems like a tricky one. Gotta remember that goodwill is part of the investment, so it should be factored in when calculating the gain on disposal.
YO
Yolande
2 years ago
I'm not sure, but I think the gain on disposal is $635,000.
AM
Amie
2 years ago
I disagree, I believe the gain on disposal is $660,000.
QU
Quentin
2 years ago
I think the gain on disposal should be $590,000.