Consolidated SFP - Theory Flashcards
What’s the double entry for buying shares?
When do we do group accounts?
What do we have to do periodically?
Why would an entity invest in a sub?(4)
What does the principle based approach improve?
Dr Investment Cr Cash
When there is control
Check control maintained
Manage competition
Synergies
Diversify into new markets
Bring expertise in house
Comparability
Control
What does the investor control?
What do they have rights to?
How do they use their power?
What do shares come with?
What does this allow you to do?
Why might over half voting rights not give control?
Investees activities
Variable returns
To affect amount of returns
Voting rights
Appoint board of directors
Gov control etc
What are 3 ways you can have power without majority shares?
Contract
Investors voting rights
Potential voting rights
Relevant activities
S
M
D
R
D
Selling and purchasing goods/services
Managing financial assets
Selecting acquiring disposing
Researching and developing new
Determining funding structure or obtaining funding
What is the single entity concept?
Where does goodwill sit?
Where does NCI sit?
What do group accounts prevent?
What’s not included?
What do we call negative goodwill?
Substance over form
NCA
Equity/liabilities
Overstating
Inherent goodwill
Bargain purchase
How do we work out FV NCI?
How do we work out proportionate NCI?
What is the initial double entry?
What is the fair value double entry?3
What is the prop of net assets double entry?
Which is parent only and which is full amount?
Shares x %NCI x MV shares
Net assets x NCI%
Dr Goodwill Cr NCI
Dr NCI %
Dr Group RE %
Cr Goodwill 100%
Dr Group RE
Cr Goodwill
FV partial, prop full
What is a margin? Mark up?
Sell 100% deduct costs
Buy at cost put profit on top
What % shares is an associate?
What does this give?
What does this mean you can do?(5)
R, P, M, I, P
20-50
Influence
Represent on board
Participate in policy
Material transactions
Interchange managerial personnel
Essential technical info
What is a joint arrangement?
What do they need?
What do joint venturers have rights to?
How are they measured?
What do joint operations have the rights to?
How are they measured?
What do we recognise?(5)
Joint control
Contractual agreement - doesn’t have to be writing
Net assets
Equity method
Assets, obligations and liabilities
Line by line
Assets
Liabilities
Revenue from sale of share
Revenue from output
Expenses
What are the two ways of measuring in the financial statement?
Cost
FV with gains and losses to OCI
Equity Accounting
Which steps are the same as for sub?
What’s not needed?
What is required extra?
W2,3,5
NCI
Investment in associate
Double entry for PURP?
Cr Inventory Dr RE
To W2 if sub
W5 if Parent
Fair Value
How do we measure the following fair value wise:
Intangible assets
PPE
Marketable Securities
Non marketable securities
Inventories (finished costs)
Inventories on disposal
Inventories replacement
Payables
Receivables
CV
MV or depreciation
Current MV
Estimated value
Selling price - disposals - reasonable profit
Same as above
Current replacement costs
PV expected to be paid
PV amounts rcd - allowance uncollectible + collection cost
