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 one and two for CSFP and give details
(W1) Group Structure- How much parent owns of subsidiary
(W2) Calc net assets of subsidiary
3 columns- at date of acquisition, at reporting date and movement (split this into ownership %)
Rows- SC, SP, Reserves, Reval suplus, R/E and total (total movement of S is NCI)
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
