consolidated Statement of financial Position

Question 1

Step 1: Structure of Group

Answer 1

• usually given in the question
  e.g aquired 48,000 of the original shares (80,000)= % ownership= 48,000/80,000=60%

Question 2

Step 2: Determining the Consideration transferred

Answer 2

• must be measured at fair value at date of exchange
• consideration given by the parent entity can be split into 4 categories: - cash -shares in parent company - defferred consideration - contingent consideration

Question 3

Step 3: calculating the fair value of net assets of the subsidary at the aquisition and reporting dates

Answer 3

For fair value of net assets at both the AQUISITION DATE and REPORTING DATE
add: share capital , share premium, retained earnings, fair value adjustments
less: additional depriciation arising on adjustments (plant/buildings), other post aquisition adjustments

Question 4

Step 4: Calculate the post aquisition gains or losses of the subsidary

Answer 4

add: fair value of net assets at the reporting date
less: fair value of net assets at aquisition date
less: post aquisition gain/loss

Question 5

Step 5: Calculate Good Will

Answer 5

defined: the premium paid for net assets of the subsidary
calculate:
add: fair value of consideration tranferred
add: fair value of NCI
less: fair value of net assets of subsidary

Question 6

Partial Goodwill Calculation

Answer 6

add: fair value of consideration transferred
add: NCI share if net assets (step 3)
less: fair value of net assets of subsidary

Question 7

Step 6: calculating the non controlling interest at reporting date

Answer 7

add: fair value consideration tranferred
add: NCI share of post aquisition retained earnings (step 4)
less: NCI share of good will impairment loss (step 5)

Question 8

Step 7: calculating the consolidated Retained Earnings

Answer 8

add: parent entities retained earnings
add: group shares post aquisition retained earnings (step 4)
less: group share of impairment (step 5)
add/less: adjustments affecting the parents retained earnings (unrealised profit)

Question 9

Step 8: Preparing the Consolidated SFP

Answer 9

• add the assets and liabilities to the parent and the subsidary after making the relevant adjustments
• eliminate intercompany balances
• eliminate the parent companies investment
• consolidate the chare capital and the share premium of the parent company only