2. Consol SoPL and OCI

Question 1

How to adjust revenue in a Consol SOPL (full year)

Answer 1

100% P + 100% S - Intra company sales (post acq)

Question 2

How to adjust COS in a Consol SOPL

Answer 2

100% P + 100% S - Intra company sales + (PUP x % remaining in inventory)

Question 3

How to adjust Inv income in a Consol SOPL

Answer 3

100% P + 100% S - Intra company interest (remove income from sub)

Question 4

How to adjust finance cost in a Consol SOPL

Answer 4

100% P + 100% S - Intra company interest (eliminate interest

Question 5

How to treat Intra group transactions

Answer 5

All transactions and between group companies are to be eliminated on consolidation. Consolidated FS treat the two companies as if they’re one. Inter-co sales must be removed on consol from both Revenue and COS

Question 6

How to adjust revenue in a Consol SOPL (mid year acq)

Answer 6

100% P + 100% S - Intra company sales (post acq) x n/12

Question 7

How to adjust COS in a Consol SOPL (mid year acq)

Answer 7

100% P + 100% S - (Intra company sales X N/12) + (PUP x % remaining in inventory)

Question 8

How to treat goodwill impairment

Answer 8

it is expensed to the P/L

Question 9

How to treat dividends

Answer 9

Dividends paid from S to P will be eliminated investment income

Question 10

How to treat NCI in Consol SOPL

Answer 10

Profit or loss made by the sub needs to be allocated between the group and the NCI - IAS 1 requires this to be presented at the bottom of the P/L

Question 11

How to treat adjustments to NCI in Consol SOPL (6)

Answer 11

• If PUP - increase COS
• If Impairment of goodwill - increase admin expenses
• If FV adjustment of sub assets - adjust COS (or admin)
• Additional dep - only will relate to subs assests so always affects sub
• PURP = will only affect the NCI if the subsell to parent as profit made by sub is partially owned by P/NCI
• Goodwill - will only affect the NCI if the group hasn’t chosen to value at FV

Question 12

Pro forma for other comprehensive income

Answer 12

Profit attributable to:

NCI - X (profit in group accounts - pup - FV dep - impairment)

Group - X (balancing figure)

Question 13

Control procedures for an associate’s lifetime (6)

Answer 13

• Inv account created on acq
• Account share of P/L made post acq with “share of associate’s P/L in period’ on Consol SOPL
• Pro rata the associate if acquired in current period
• If associate fails to perform - impair
• If there are interco sales - PURP calc
• When div has been paid by associate to parent - eliminate

Question 14

What happens when P sells to an Associate

Answer 14

The parent has recognised profits on inv that will be brought back int0 the group within the share of net assets of the associate

DR Group COS
CR Inv in associate

Question 15

What happens when A sells to P

Answer 15

The associates have recognised profits on inv that are still in the group within the inv of the parent

DR share of profits from Associate
CR group inventory

Question 16

How to account for a disposal of an associate in a consol SOPL

Answer 16

DR NCI (decrease)
CR Net assets (decrease)
CR Goodwill (decrease)

DR Bank (Increase)
DR/CR Profit/loss on disposal (increase/decrease)

Question 17

How to account for a disposal of an associate in a individual SOPL

Answer 17

Proceeds - (DR Bank) - X
Carrying amount of investment (CR investments) - (X)
Gain/Loss on disposal - (DR/CR P/L) - X/(X)