CSFP MAIN

Question 1

Give proforma of w2 and how to start it (6)

Answer 1

Column- acquisition date, reporting date, movement
Rows- SC, SP, RE, FV uplift and a. dep, IA

populate reporting date column from SFP figures
RE reporting balance found on SFP and acquisition in question

prorate retained earning of S if acquired midyear

Question 2

Give proforma for w3 (goodwill)

Answer 2

cost of investment- consideration at FV (p to s)
NCI at acq- total w2 acquisition column x NCI %
(FV of S’s NA)- total acquisition sum

=Goodwill at acq

(impairment)- given in Q

Question 3

Give proforma for w4 (NCI)

Answer 3

NCI at acq- total w2 acquisition column x NCI %
NCI% x S’s NA)- total movement x NCI %

Question 4

Give proforma for W5 (RE)

Answer 4

100% P RE (SFP)
- Deferred consideration (if included)
Group % of total movement (w2)
(impairment)- if NCI valued at FV

Question 5

Intragroup transaction adjustments

Answer 5

If amounts agree: Total receivables and also total payables but remove amount from both balances

If cash/goods in transit- remove full amount from TR, full amount transferred but add difference i.e. missing amount, to cash

e.g TR is 50k but TP is 40k for each party. In CSFP reduce TR by 50k and TP by 40k but increase cash by 10k (50-40)

Question 6

How do you treat inventory PURP and NCA PURP

Answer 6

P seller- reduce group RE in w5 and reduce S inventory (SFP)
S seller- reduce RE in w2 and reduce P inventory (SFP)

PURP= CA after YE - CA if no sale –> remove dep after
P seller- reduce RE in w5
S seller- reduce RE in w2

W2 under report date
W5 under impairment

Question 7

Ruling for goodwill consideration w3 (5). How does this affect w3 and w5?

Answer 7

o Cash- cash paid
o Deferred cash- PV of cash paid
o Share- MV at acquisition
o Deferred share- MV at date of issue (IGNORE FUTURE MV)
o Contingent consideration- FV at acquisition date (given)

In w3- Consideration= cash + deferred (pv)
in w5 remove: deferred consideration - PV deferred consideration
Add deferred consideration under CL in CSFP

e.g. deferred amount= 441,000 and PV of this is 400,000
remove 41,000 from w5 RE

Question 8

In goodwill calc- what do you do if NCI is measured at FV or proportionate?

Answer 8

Proportionate= Consideration + NCI % of net assets at acquisition – 100% of NA at acquisition = Goodwill at acquisition

FV= Consideration + FV of NCI at acquisition – 100% NA at acquisition= Goodwill at acquisition

Question 9

List the 4 FV adjustments needed

Answer 9

Always affects W2

1. PPE- 2 lines under RE in w2 for FV uplift and A. Depreciation
2. Goodwill- any in S’s assets remove from W2 both column
3. IA- add FV in w2 in both columns and add a. Amortisation
4. Contingent liabilities- include in both below

a. In CSFP- provision (100% p + 100% s + contingent liability)
b. W2- line under RE as ‘adjustments’ and remove from both columns

Question 10

What is W6, when is it used and give pro-forma

Answer 10

Used when other reserves mentioned (e.g. reval surplus)

100% Ps other reserves
P% of S’s post-acquisition movement in reserves
P% of A’s post­-acquisition movement in reserves