Ch18 - Consolidated SoFP Flashcards
W2 - Net Assets of Subsidiary
Share Capital - Acquisition and reporting date - doesn’t change - if not given see bottom. Use NCI at acquisition
Share Premium - Acquisition and reporting date - doesn’t changes
Retained Earnings - Acquisition and reporting date - can change. Acquisition given in Q usually, not given but in table as this + last year then add together
Other Equity
FV Adjustments - Acquisition and reporting date
FV Depreciation - Reporting date only
Less: PURP if S is seller - reporting date only (inventory)
Less: PURP if S is seller - Reporting date only (transfer of asset)
W3 - Goodwill
Fair value consideration at FV - made up of cash paid, share issue, deferred cash, deferred shares, deferred contingency
NCI at acquisition - FV given. Proportionate = Net assets at REPORTING DATE*NCI% - DOUBLE CHECK
Less: subsidiary’s assets at acquisition (W2)
Less: Goodwill impairment full value
W4- - NCI
NCI At acquisition (same as above)
NCI % * Post acquisition reserves W3
NCI% * Goodwill impairment
W5 - Group Retained Earnings
100% P Reserves from table + (Add last year + this year if given)
P% * Post acquisition reserves W3
P%* Goodwill impairment
Less:PURP if P is the seller (inventory)
Less: PURP if P is seller (Transfer of asset)
Deferred Consideration Interest (total amount with interest - SoFP)
Consideration
Cash: Dr FV Consideration (W3), Cr Cash (remove from investments on Cons SoFP)
Deferred Cash = Dr FV Consideration (W3), Cr Non-current Liability deferred consideration, unwind each each year Dr Finance Cost Cr NCL.
The interest portion also goes to W5 as a minus
Remove professional fees from consideration
If cash value not specified in the question
Assume full purchase of whatever the investment on the balance sheet is
Consideration: Shares and Deferred Shares
Shares: Find number of shares from balance sheet, 2 for 5 = /5*2, multiply by MV and also percentage of holding. Split between share capital and share premium using MV
Dr FV Consideration (W3), Cr Share Capital, Premium
Contingent Consdieration
Dr Cost of investment (W3), Cr Liability/Equity
NCI at acquisition if only share price given
Calculate shares from SoFPprice at acquisitionNCI percentage. FV method only
Intragroup Transactions
If P owes S 400, but S recognises 500
Remove 400 from S’ receivables and from Current Liabilities
Remove 100 from receivables and add 100 to bank
FV Adjustments, NCA and Depn of S
Calculate revalued amount as well as the Depn. Depn is only the revaluation amount.
The FV adjustment of Land/Plant goes to Acq and Reporting in W2
Depn goes to Reporting only
Add asset value to NCA, minus Depn
Investment into S’ Loan stock
Find Loanstock value from SoFP of S, calculate the percentage of investment and minus this off Investments and NCL: Loan notes
Dr Investments (-)
Cr NCL - Loan notes (-)
Sale of Goods: PURP - Inventory
If S sells to P, Cr W2 (reporting minus value), and Dr Cos (-)
If P Sells to S, Cr W5 (minus value), Dr Cos (-)
Calculate profit on the goods, and take the amount of goods left as a % on sale price and calculate the value of PURP
If cost plus 25%, divide by 125*25
Remember - only calculate profit on WHATS LEFT IN INVEN
Mid-year Acquisition
This only affects the W2 value of retained earnings.
E.g. if Retained earnings are reporting date is $69k.
Mid year Acq, and profit of $9k, Acquisition date minus off the apportionment of the profit earned
Transfer of Goods: PURP - Non-current assets
If P Transfers to S:
Calculate:
Carrying Amount, Depn, and Carrying amount
With, Without Transfer and the difference.
Dr W5 - Group Ret Earn with the $5k -
Cr W2 - Depn - the Depn Portion +
Cr PPE - The balance -
Revaluation Surplus on subsidiaries
Add to reporting date if needed to require the Net assets at reporting date for proportionate method NCI - CONFIRM REPORTING OR ACQ
Leave from Post-acq reserves for W5
Proportionate Method: Goodwill Impairment
Don’t multiply by P or S% - Ignore W4 - Keep as total
Dr W5
Cr W3
Share for Share Exchange how to, for consideration
Take shares of subsidiary from SoFP
Multiply by fraction e.g. 2 for 3 = 2/3
Multiply by P% - the share capital of Sub*P% gives the shares taken for NCI
Multiply by market price of the PARENT
Removing Investments on the SoFP
If the investment is specifically specified as the subsidiary, Remove it
If it isn’t - likely some to be left and remove the cash payment from it or other bits to leave some on the SoFP
Remove Subsidiary Consideration always
Dr W3, Cr Investments
Share for share exchange - Value
If not given enough data to work out consideration e.g:
Market price of PARENT
2/3
Shares taken
Then use the value specified of the subsidiary on the SoFP. This is likely to be immediate and specified - remove it from the SoFP, but it gives you the consideration
Always Remember Apportionment
If purchased 3 years ago asset - depn x3
If Goodwill not given
Use the total of W3 and the percentage given
Revaluation Surplus - Treatment of Subsidiary and W2 Usage
Usually a post-acq revaluation increase, use reporting date only of W2 - Only real use of this is if NCI is proportionate, or Net assets at acquisition W3
Remember to remove this to calculate post-acq reserves for W4/W5
On the SoFP - Multiply the Revaluation surplus by Parent %
If NCI value given and it’s only an SoPL given
Multiply total shares*price e.g. $1 shares
