Deemed Disposal Of A Subsidiary

[Muhammad Amir]

Dear Mr KamranACA,

This was the only requirement

<b>I am facing difficulty in caculating "Carrying Amount Of Investment in Associate" on deemed dsposal topic.</b>

I am sorry to disturb you again.

I have taken your considerations to compute cost of Investment in Associate but i am still unable to calculate correct value.

Anyway, here is the full fledge question-

The Balance Sheets and Profit and Loss accounts of A Ltd and B ltd for the year ended 31 december 2004 are set below.

BALANCE SHEET-

========================A Ltd===========B Ltd
==========================$==============$===
=Investment at Cost====406,000===============
=Non current assets====350,000========470,000
=Stocks================60,000=========55,000
=Debtors===============40,000=========145,000
=Cash and Bank=========150,000========170,000
_____________________________________________
======================1,006,000=======840,000
_____________________________________________

O.Share Capital($1)===300,000=========300,000
Share Premium=========================170,000
Accumulated Profits===606,000=========320,000
Trade Creditors=======100,000=========50,000
_____________________________________________
======================1006,000========840,000
_____________________________________________


PROFIT AND LOSS ACCOUNT-

========================A Ltd===========B Ltd
==========================$==============$===
Sales==================800,000========600,000
Cost Of Sales==========450,000========410,000
_____________________________________________
Gross Profit===========350,000========190,000
Selling Expenses=======98,000=========50,000
_____________________________________________
Profit Before Tax======252,000========140,000
Taxation===============26,000=========20,000
_____________________________________________
Profit After Tax=======226,000========120,000
Dividends==============(60,000)==============
_____________________________________________
Profit for year========166,000======120,000
Profits b/fwd==========440,000======200,000
_____________________________________________
Profits c/fwd==========606,000======320,000
_____________________________________________


Notes-

-A Ltd Acquired 60% Ordinary Shares Of 'B Ltd' on July 1, 2002 at cost $406,000, when reserves of 'B Ltd' were $120,000.

-Included in the tangible assets of 'B' is a piece of land whose fair value exceeded the book value by $30,000 at the time of Acquisition.

-On October 1, 2004 "B Ltd" made a right issue of 100,000 Ordinary Shares at a premium of $1.5 per shar. A Ltd decided not to subscribe

for right issue.

-In November "B Ltd" sold goods to A Ltd at an invoice price of $15,000. The Original cost of these goods were $12,000, 60% of these goods are in A's stock at the balance sheet date.


I am facing difficulty in calculating the remaining "Carrying Amount Of Investment in Associate".

I am once again sorry to disturb you but this is the only source from where i can get answer because i have left my tuition provider because he is wasting our important time.

I hope to receive answer soon.

Regards,

Muhammad Amir