Advanced Adjustments

Question 1

Revenue Recognition under IFRS15
5 steps, 3 key points to recognise for long-term contracts

Question 2

Group share of GOODWILL

Answer 2

Cost of Investment
LESS
P% *(S’s issued SHARE + S’s R.E (Aqu.Day))

Question 3

NCI of GOODWILL

Answer 3

Fair Value of S’s Shares
LESS
S%* (S’s issued SHARES + S’s R.E (Aqu.Day))

Question 4

Total GOODWILL

NON-CA

Answer 4

Group + NCL’s share of GOODWILL

Question 5

Consolidated R.E

–> Statement of Changes in Equity

Answer 5

P’s R.E
ADD
P% *(S’s R.E - S’s R.E (Aqu.Day))

–> ADD
GROUP N.I
LESS
P’s DIV

Question 6

Non Controlling Interest

EQUITY

on B.S P’s Shares (&Div) displayed ONLY

Answer 6

S% (S’s Net Asset)
*ADD
NCL’s GOODWILL calculated
(Fair Value LESS S% *(S’s shares + S’s RE (Aqu.Day)))

Question 7

Sub’s I.S Adjustments

After PAT

Answer 7

Consolidated Figures and ADD:
- Non-Controlling Interest
= S% *(S’s PAT)
*Entered after PAT

Question 8

Exchange Difference

ADDED back in for consolidated statement of RE

Answer 8

CLOSING Rate on Year = B.S, RE
AVERAGE Rate = I.S
Difference between the Adjusted Net Asset + R.E to the CLOSING Net Asset

Question 9

Associate’s B.S Adjustment

Answer 9

ONLY P’s Figures and ADD:
- Investment in Associates (NON-CA)

= Cost of Investment
ADD
P% *(A’s R.E - A’s R.E (Aqu.Day))

Question 10

Associate’s I.S Adjustment

Prior to: Profit Before Tax

Answer 10

ONLY P’s Figures and ADD:
- Group’s Share of Associate’s PAT (Final line before Profit Before Tax)
= P% *(A’s PAT)

Question 11

INTER-Group Transaction for Consolidated I.S
- Realised Profit (SOLD ON) / (SOLD TO P)
- Unrealised Profit

Answer 11

• SOLD ON: balances = NO Effect
  Consolidated Figures (tax remains the same and then Con.)
  –> REDUCE Revenue (‘-‘ Inter-Co SALES)
  –> REDUCE COS (‘+’ Inter-Co SALES)
• SOLD TO:
  –> SAME Adjustments
  UNREALSED: Reduced Con. Figures
  Consolidated + all Adjustments already made &
  –> REDUCE Seller’s Profit (Provision for Unrealised Profit ‘-‘)
  = COGS ( by mark-up cost: sale price / (1 + mark-up %) )
  —> gross profit = sales price - COGS
  = g.p x proportion of the U.P

Question 12

INTER-Group Transaction for Consolidated B.S
- Unrealised Profit

Answer 12

> REDUCE Inventory (CA) of the BUYER

> REDUCE R.E of the SELLER

(if SUB = S’s R.E - S’s R.E (Aqu.Day) - Un. P)

BOTH using the Unrealised Profit Figure
Everything else calculated as Normal