CSFP workings

Question 1

W1

Answer 1

Group structure/table showing:
- %owned
- NCI%
- date of acquisition
- RE at acquisition
- method (FV or proportionate)
etc

Question 2

W2

Answer 2

Net assets of subsidiary
- details of SC, SP, revaluation surplus, RE, FV adjustment, FV depreciation and PURP
- @ acquisition and @ reporting date and post acquisition movement
- FV adjustment is in both columns
- FV depreciation and PURP is deducted from reporting date column

Question 3

W3

Answer 3

Goodwill
Consideration paid
- cash/shares now
- deferred cash/shares
- contingent consideration
plus NCI @ acquisition
less FV of S’s net assets @ acquisition
= goodwill @ acquisition
less: impairment b/f and in the year
= goodwill @ reporting date

goodwill on FV or proportionate method

Question 4

What are the different methods of goodwill?

Answer 4

FV or proportionate method

P method:
- recognised in relation to parent only
- W3

FV method:
- recognised in relation to parent and NCI
- FV of NCI will be given in exam and this amount is inserted in the NCI line of the goodwill working

Question 5

W4

Answer 5

NCI

FV of NCI @ acquisition
NCI% of post acquisition movement in NAs
less: NCI% of goodwill impairment
= NCI using FV method

NCI using proportionate method = NCI% x S’s net assets @ reporting date

Question 6

W5

Answer 6

Group RE

100% P’s RE
P% of S’s post acquisition RE
P% of A’s post acquisition RE
less: PPE/inventories PURP (P sells to S)
less: P% A’s PURP
less: goodwill impairment to date
Add: Any gain on bargain purchase
less: P% of A’s FV depreciation
= group RE

Question 7

What do you need to be careful with goodwill impairment when calculating group RE?

Answer 7

• deduct P% if the NCI was valued at FV
• deduct in full in the NCI was valued using the proportionate method (parent = proportionate)

Question 8

W6

Answer 8

Other group reserves

100% of P’s other reserves
P% of S’s post acquisition movement in other reserves (from W2)
= other group reserves

Question 9

W7

Answer 9

Investment in associate

Original cost of investment
P% of A’s post acquisition NAs
less: impairment to date on A
less: P% of A’s PURP where P is seller
less: P% of A’s FV depreciation
= investment in associate on CSFP

Question 10

How to calculate PPE PURP

Answer 10

assume that the asset has never been transferred:
CA at YE after transfer
less: CA if transfer never occurred
= PPE PURP

Dr RE of seller (W2 if S seller or W5 if P)
Cr PPE