Basic principles of CSFP Flashcards
Double entry for acquisition of subsidiary
Parent: Dr Investment Cr Cash
When are group accounts required? What is control?
Group accounts are needed when one entity takes control of another. Control is given if more than 50% SC
Control is transferred when you get right to appt or remove key personnel. Also right to direct investee into transaction benefitting investors
Give 4 steps to forming consolidated SFP
1) Consolidate all assets/liabilities (exclude investment in S within P SFP)
2) Add P SC and SP in equity only
3) Add P R/E and P’s share of S’s R/E
4) Reflect in equity NCI owns share of net assets
What do you have to disclose in groups? give IFRS and 2 disclosures
IFRS12 disclosure of interest in other entity
-Sig judgment determining nature of interest in other entity and type of joint arrangement
-(for subsidiaries) interest NCI has in group activity and cash flow and how change has affected interest
What is working three and give proforma (workings) for CSFP
(W3) Goodwill- this is the difference between NRV and FV recorded as IA. It is any excess paid of company asset value.
Goodwill: Cost of investment (P) + NCI at acquisition (S) - FV of S’s net assets at acquisition - NCI impairment
NCI- total at acquisition w2
before impairment is goodwill at acq and after is goodwill at reporting
What is working 4 and 5 for CSFP and give any formulas
(W4) NCI- can be found in w2
(W5) Group R/E
Total= 100% P’s + P’s portion of S Re movement* - goodwill impairment + negative goodwill (gain on bargain)
*w2 RE total movement split
What is working 6 of CSFP?
Other reserves. An example is the group reval surplus
100% P’s other reserves + P’s portion of S’s movement in other reserves
What is an intragroup loan and how do you treat it?
When group member provides loan to another. It is a liability in one and a loan receivable in another.
Do not include in CSFP and if interest is unpaid on this loan by Y/E remove from Finance cost and Income
How do you treat intragroup transaction? Give double entry
If at Y/E current accounts do not agree, items such as goods or cash may be in transit. For CSFP you treat as if it has been received
Dr Payables
Cr Receivables
