Accounting for groups big example week 7 to learn Flashcards
GET FROM MOODLE THE CONSOLIDATED BALANCE SHEET QUESTION, NOW LETS ANSWER THESE QUESTIONS
1) what is net assets ?
2) lets say it go plc acquires 700,000 ordinary shares of stop plc where stop plc issues 1 million ordinary shares, what is the percentage they own?
3) what is the difference between the reporting date and when it was acquired?
1) Shareholders funds which where 4840 at date of acquisition.
2) 70%
3) 3 years.
GET FROM MOODLE THE CONSOLIDATED BALANCE SHEET QUESTION, NOW LETS ANSWER THESE QUESTIONS
1) As Go plc doesn’t own 100% of stop plc what does it mean we have to work out?
1) we have to work out Total NCI, buy splitting it up into 3 sections
1) NCI and goodwill on acquisition date
2) NCI changes between acquisition date and beginning of current reporting period
3) NCI changes in the current period.
GET FROM MOODLE THE CONSOLIDATED BALANCE SHEET QUESTION, NOW LETS THE QUESTION BIT BY BIT, EXPLAIN WHAT YOU WOULD HAVE TO DO?
(2) HINT WHAT WOULD IT MEAN IF NOT ALL ASSETS ARE STATED AT FV at acquisition date?
WORK OUT FULL GOODWILL AND WHAT CONTRIBUTES TO PARENT AND NCI.
1) Essentially this tells us to calculate goodwill, as it gives us the Value of NCI FV, we know we have to calculate full goodwill, so there is goodwill attached to NCI.
2) Then we would have to using IFRS 3 decide what the FV’s are.
GET FROM MOODLE THE CONSOLIDATED BALANCE SHEET QUESTION, NOW LETS THE QUESTION BIT BY BIT, EXPLAIN WHAT YOU WOULD HAVE TO DO?
As stop plc sells to go plc there will be implications on NCI ( in particular it will have implications on NCI changes in the current period).
Remember DR sales revenue = reduce sales
DR Cos = increase.
Cr income expense = reduce income expense.
GET FROM MOODLE THE CONSOLIDATED BALANCE SHEET QUESTION, NOW LETS THE QUESTION BIT BY BIT, EXPLAIN WHAT YOU WOULD HAVE TO DO?
(Hint: as this unrealised profit relates to sales made by Go plc, then no adjustments are needed when calculating the NCIs in Stop plc).
GET FROM MOODLE THE CONSOLIDATED BALANCE SHEET QUESTION, NOW LETS THE QUESTION BIT BY BIT, EXPLAIN WHAT YOU WOULD HAVE TO DO?
(Hint: as the NCIs in Stop plc is being measured at fair value, then this will mean that the NCI will incorporate a proportional share of goodwill; therefore, any impairment in goodwill will impact the NCI in Stop plc).
It will be taken away in NCI second section ( NCI CHANGES BETWEEN ACQUSITION AND BEGINNING OF CURENT REPORTING PERIOD) and we taken away from RE on 1 jan 2018 when reconciliating opening and closing retained earnings.
GET FROM MOODLE THE CONSOLIDATED BALANCE SHEET QUESTION, NOW LETS THE QUESTION BIT BY BIT, EXPLAIN WHAT YOU WOULD HAVE TO DO?
GET FROM MOODLE THE CONSOLIDATED BALANCE SHEET QUESTION, NOW LETS THE QUESTION BIT BY BIT, EXPLAIN WHAT YOU WOULD HAVE TO DO? ( BIG HINT HERE EXPLAIN WHAT WOULD HAPPEN AND DO THE REVERSAL)
ALSO whats important to notice for exam?
THE DURING THE YEAR DIVIDEND, its already paid, so we just have to reduce revenue and dividend paid, for dividend declared its different.
GET FROM MOODLE THE CONSOLIDATED BALANCE SHEET QUESTION, NOW LETS THE QUESTION BIT BY BIT, EXPLAIN WHAT YOU WOULD HAVE TO DO?
Now before we do anything what are the 3 sections of NCI we should have?
With the first section we can derive them Fair value of stop plc on acquisition and NCI without working it out individually.
Complete this.
Complete a statement of Consolidated statement of comprehensive income for the year ended 31 December 2018 ( HINT at end of year you should get 712.60)
Also work out profit attributable to parent and NCI
Also work out the amount of Total comprehensive income attributable to parent and NCI.
What do we notice here.?
There is no additions to the Other comprehensive income hence they are the same.
How would the table look like for Reconciliation of opening and closing RE ( HINT THINK ABOUT THE YEAR WE ARE LOOKING AT?
Opening RE + profit for the year - earnings attributable to NCI - any dividends which are recognised by group.
Fill in.
How should the statement of Financial position look like? Whats there to not about Dividends receivable a dividends payable?
they might not always be there so make sure that you look you take away from accounts receivable or accounts payable if not there.
Fill in the SOFP
How will the statement of changes in equity look like year end 31 December?
Hint, there wasn’t any OCI hence why its small
COMPLETE THIS.
