F2C - Chapter 12: Group accounts - Subsidiaries (CSPLOCI)

Question 1

If a subsidiary was acquired mid-year what must be consolidated?

Answer 1

Only the post-acquisition results

Question 2

What will happen to dividends paid by subsidiary to parent upon consolidation?

Answer 2

Eliminated from the parent’s investment income

Question 3

What will happen to intra-group balances and transactions when consolidating the accounts?

Answer 3

Eliminated in full
Intra-group transactions are eliminated from the consolidated SPL and other comprehensive income
Any profit still held within the group’s assets from intra-group trading should also be eliminated

Question 4

How do we record depreciation adjustment?

Answer 4

Adjustment should be made to reflect the impact of the fair value adjustment on the current year’s depreciation charge
As this depreciation charge relates to the subsidiary’s assets, the adjustment should be reflected in the calculation of profit attributable to the NCI