Chapter 19 - Consolidated Statement of Profit or Loss Flashcards
What are the basic principles when preparing the consolidated statement of profit or loss?
combine parent and total subsidiary income, expenses and any other income. Remove any intra-group items such as trading and dividends received
What consolidated adjustments will be made to the SPL?
PUP (increase cost of sales)
Fair value depreciation
Impairment
Unwinding of deferred consideration
Movement in contingent consideration
What is the double entry for removing unrealised profits in the SPL?
Dr Cost of sales (SPL)
Cr Inventory (SFP)
When would there be a PURP adjustment?
Only if sub is the seller
When combining subsidiary performance only include what?
post-aquisition revenue and expense
What should we assume about revenue and expenses with mid year acquisitions?
accrue evenly unless told otherwise
How will dividends received from the sub after the date of acquisition be treated?
will need removed from investment income in their entirety
How are intra-group transactions that occurred after acquisition treated with mid year acquisitions?
remove them.
How are intra-group transactions that occurred before acquisition treated with mid year acquisitions?
should not be removed as the parent had no control over the transaction at that date
How should PUP’s be treated in mid year acquisitions?
recognised in full, with no time apportionment
How should fair value depreciation be treated in mid year acquisitions?
arises as a result of an adjustment to the value of the subs net assets at acquisition, so the FV depn will only be calculated from the date of acquisition
How should Impairements be treated in mid year acquisitions?
relates to goodwill, so must relate to the post-acquisition period. Included in full
When calculating mid year acquisition for NCI what is included?
only include subsidiary profit since the date of the acquisition. pro rate the subs profit after tax
