18. Consolidated statement of financial position

Question 1

What is W2 and how do we calculate it?

Answer 1

Net assets of subsidiary

SC
SP
RE
Reval surp

Question 2

What is W3?

Answer 2

Goodwill

Parent investment at FV
NCI at acquisition
Less: FV net assets at acquisition (W2)
Less: Impairment

Question 3

How do we do the FV method of NCI at acquisition?

Answer 3

NCI value = fair value of NCI’s holding at acquisition

(number of shares NCI own × subsidiary share price).

Question 4

How do we do the proportion of net assets method of NCI at acquisition?

Answer 4

NCI value = NCI % × fair value of net assets at acquisition (from W2).

Question 5

What do we do if goodwill is negative?

Answer 5

If goodwill is negative, it is regarded as a gain on a bargain purchase and
is included as a gain within retained earnings in Working 5

Question 6

What is W4

Answer 6

NCI value at acquisition (as in (W3))
NCI share of post-acquisition reserves (W2)
Less: NCI share of impairment (fair value method only)

Question 7

What is W5?

Answer 7

P’s retained earnings (100%)
P’s % of S’s post-acquisition retained earnings
Less: P’s share of impairment (W3)