Chapter 12-16 Flashcards
what is a step acquisition
several successive share purchases
in step acquisition what does control mean
more than 50%`
in step acquisition what does significant influence mean
shareholding of 20-49
if there is a step acquisition to gain control, how do you account
as if you’ve sold previous investment and add full purchase of sub
if there is a step acquisition to retain control, how do you account ( ie gone from 60 - 70 % shareholding)
as if the parent is buying the additional NCI, therefore a decrease of NCI
Calc the NCI up until the control has increased
then x by (% purchased / NCI % Pre acquisition)
if there is a step acquisition to a partial disposal how do you calculate if its a sub to associate
as if you’ve sold the sub and purchased an associate
consolidate as sub until disposal
show a profit or loss on disposal
treat as an associate after
what is the calculation for group profit or loss on disposal
FV of consideration received + FV of investment retained
less
Net assets at date control lost
GW at date control lost
NCI at date control lost
if you’ve had any gains or losses in the OCI before a sub is disposed of, what needs to happen
reclass to P/L
what is a deemed disposal
when a sub sells shares and the parent does not take up all of its rights which ends up being a disposal and some control lost for the parent
calculation on disposal of associate to investment ie 40% reduced to 10%
FV of consideration + FV of any inv retained
less
cost of associate
share of associates post acquisition reserves
less impairment of investment
what is a disposal group
a group of assets to be disposed in a single transaction
acronym for criteria for assets to be held for sale
Price at which the asset is held for sale is reasonable in relation to FV
Unlikely that significant changes will be made to the plan to sell
Management must be committed to a plan to sell
Active plan to locate buyer must be initiated
Sale expected to qualify as a completed sale within 1 year
steps to present NCA held for sale
1) hold it as carrying amount or revalued amount
2) write it down to fair value less costs to sell if that is less than carrying amount
impairment losses to be charged to P/L
3) NCA held for sale is not to be depreciated
4) any changes in FV - selling costs are treated as an impairment
how to treat NCA’s that are being abandoned
it cant be classified as held for sale. remove from PPE and info about the closure could be disclosed
definition of a discontinued operation
a component of an entity that has been disposed of or is classified as held for sale and
- represent a separate major line of business or geographical area
- part of a plan to dispose of a separate major line of business or geographical area
- a sub acquired exclusively with a view to resale
what is a joint arrangement
two or more parties have joint control
what is joint control
contractually agreement of sharing control which exists only when decisions about relevant activies require the unanimous consent of the parties sharing control
what is a joint operation
the joint parties have rights to the assets and obligations to the liabilities
what is a joint venture
the joint parties have rights to the net assets
how do you account for a joint arrangement that is not structured through a separate vehicle
joint operation - line by line accounting
how do you account for a joint arrangement that is structured through a separate vehicle
joint venture - equity accounting
are adjustments required for joint operations in consolidated accounts
no, the figures are already accounted for in the separate FS
what is accounting for joint ventures the same as
accounting for an associate
what is IFRS 12
disclosure of interest in other entities
