CSFP (Practice)

Question 1

Columns used in CSFP?

Answer 1

Parent
Subsidiary
Adjustment
Group SFP

Question 2

After listing proforma?

Answer 2

Do adjustments (Cash in transit, PURP)

Question 3

Common workings in CSFP

Answer 3

FV net asset value
Goodwill
NCI
Group retained earnings

Question 4

Columns in net asset value?

Answer 4

Acquisition date
Closing date
Post-acquisition date

Question 5

Rows in net asset value?

Answer 5

Share capital
Retained earnings
Fair value adjustments
PURP

Question 6

Steps for the workings?

Answer 6

Asset and liabilities (PURP, cash in transit)
Goodwill
NCI
Group retained earnings
PPE carrying amount (relates to goodwill)

Question 7

Where is share for share calculated?

Answer 7

In the shares for consideration

e.g. two for every three shares is denoted as 2/3

Question 8

What happens with PPE carrying amount?

Answer 8

It is deducted from NCA

Question 9

How to calculate loan notes?

Answer 9

Subsidiary shares * parent % * share price/number of shares

Question 10

Eliminate unrealised profit?

Answer 10

Credit inventory. Reduce current assets

Question 11

Is cash in transit a current asset?

Answer 11

Yes

Question 12

What can consideration transferred include?

Answer 12

Shares
Loan notes

Question 13

Deferred cash?

Answer 13

Will make a payment in the future

Question 14

Calculate inventory from cost and fair value?

Answer 14

Fair value - cost

Question 15

Net assets for parent or subsidiary?

Answer 15

Subsidiary

Question 16

Is cash included in goodwill?

Answer 16

Yes

Question 17

Impairment losses?

Answer 17

Deducted from goodwill and NCI

Question 18

What is pro rating?

Answer 18

Process of proportionally allocating financial figures based on a specific time period

Question 19

Steps for CSFP?

Answer 19

Proforma
Adjustments (current assets and liabilities)
Fair value adjustments
FV net assets of subsidiary
Goodwill
NCI
Retained earnings

Question 20

Cash in transit for payables?

Answer 20

100% P + 100% S - payables amount

Question 21

Cash in transit for receivables?

Answer 21

100% P + 100% S - cash amount - receivables amount

Question 22

Greater than 50%?

Answer 22

Subsidiary

Question 23

Between 20% to 50%?

Answer 23

Associate

Question 24

What is working 1?

Answer 24

Group structures

Question 25

What is working 2?

Answer 25

FV of subsidiary's net assets at acquisition

Question 26

What is working 3?

Answer 26

Goodwill

Question 27

What is working 4?

Answer 27

NCI

Question 28

What is working 5?

Answer 28

Retained earnings

Question 29

P sells $100 goods to S at $125 and S has not sold goods at end of year? (Unrealised profit)

Answer 29

P is the seller. $125-$100 = $25 (PUP) Decrease retained earnings Decrease inventory

Question 30

If P is seller?

Answer 30

Adjust working 5

Question 31

If S is seller?

Answer 31

Adjust working 2 at reporting date instead of adjustment date

Question 32

S sold goods P at $120000 based on markup of 20%. Half of goods remain in inventory at year end? (unrealised profit)

Answer 32

S is the seller. 120/2 = 60 60 * 20/120 = 10 (PURP) Decrease inventory Decrease retained earnings. PURP is deducted in W2 in reporting date section, instead of W5

Question 33

P sold an item of $250000 to S when value was $200000.

Answer 33

P is the seller. Proceeds - CV = 50 (PUP) Decrease retained earnings Decrease PPE. PPE has same rules as inventory

Question 34

Fair value adjustment treatment where fair value is £50000 higher than book value and there's 10 years of depreciation?

Answer 34

Done in working 2 FV (PPE) 50 (adjust at reporting and adjustment date) - (extra depreciation or sale of inventory) 5 (only reporting date) Also adjust PPE: 100%P + 100%S + 50 - 5

Question 35

Fair value adjustment treatment where fair value is £100000 and is a contingent liability?

Answer 35

Done in working 2 100000 is deducted from reporting date and acquisition date. 100000 contingent liability is recorded in CL

Question 36

Start of acquisition for depreciation in fair value adjustment?

Answer 36

Put in full depreciation for fair value adjustment

Question 37

Mid year acquisition for depreciation in fair value adjustment?

Answer 37

Pro rate. e.g. 50 * (6/12)

Question 38

If acquisition took place 2 years ago for depreciation in fair value adjustment?

Answer 38

2 years worth of additional depreciation (50/10) * 2

Question 39

Examples of consideration?

Answer 39

Acquiring a controlling interest in a subsidiary Share for share exchange Deferred cash consideration Contingent consideration

Question 40

Share for share exchange calculation and journal entry? Harry acquired 80% of 10 million ordinary $1 shares of Sally offering share exchange of one for every four shares acquired. FV of Harry;s shares is $3 per share

Answer 40

# of P shares issues = 8m / 4 = 2m Number of S shares acquired = 80% * $10m = 8m Number of shares issued = 8m / 4 = 2m 2m * $3 = $6m Investment $6m (Not relevant) Increase Share capital ($2m @ $1) $2m Increase share premium $4m (Balancing)

Question 41

Deferred meaning?

Answer 41

Pay cash in the future

Question 42

Deferred consideration?

Answer 42

Parent may agree to pay cash in future following acquisition of subsidiary

Question 43

Deferred consideration calculation?

Answer 43

Cash OR number of S shares acquired * present value $ * discount rate $

Question 44

Deferred consideration liability?

Answer 44

Deferred consideration * cost of capital %

Question 45

Deferred consideration in SFP?

Answer 45

Deferred consideration + Deferred consideration liability

Question 46

Contingent consideration?

Answer 46

Recorded at fair value. Takes into account probability of payment being made

Question 47

What requires a separate working and is not adjusted in CSFP?

Answer 47

Goodwill NCI Retained earnings Share premium

Question 48

Consideration transferred?

Answer 48

Always subsidiary figures

Question 49

How is depreciation for one year treated?

Answer 49

Decrease PPE Decrease retained earnings

Question 50

How to calculate partial goodwill?

Answer 50

Fair value of consideration + (NCI * net assets at acquisition) - net assets at acquisition

Question 51

When to do markup calculation?

Answer 51

Viagem co had a markup cost of 25% on sales. Greco had $1.5million of these goods in inventory