Group Accounting Basic groups

Question 1

Where is the gain from bargain purchase recorded

Answer 1

Income statement (credited) Then later on it will be reflected in the retained earnings of the balancesheet (SOFP) as the final value of the income statement is reflected in the retained earnings

Question 2

How are subsidiarys financial satements accounted for by the parent

Answer 2

Subsidiaries financial statements are completely consolidated by the parent

Question 3

Hoe are the associates financial statements accounted for by the parent

Answer 3

The are accounted for by using the equity method

Question 4

What is IFRS 3

Answer 4

Business combination

Question 5

What are the exclusion from consolidation

Answer 5

1) Lack of effective control
2) A sub that is held exclusively for resale and is classified under IFRS 5 and thus do not require consolidation.

(held as current asset held at the lower of carrying amount and fair value less selling costs.)

Question 6

What is bargain purchase

Answer 6

When parent buys the sub for less than the fair value of its net assets.
It negative goodwill (gain for us ) must be recorded as a gain in the income statement and later will be taken to retained earnings in working 5.

Question 7

Between how long is goodwill revewed for impairment

Answer 7

Annually

Question 8

Under the revised IFRS, ALL direct cost of acquisition, must be capitalised or expensed

Answer 8

they must be expensed.

Question 9

Contigent consideration , what are the types and which are remeasured

Answer 9

1) Liability based consideration are recorded at fair value of the acqusition date and are re measured every year with changes relfected on the value of the liability.

2) Share based consideration is recorded as equity (shares to be issued) It is not re measured even if there are pirce changes.

Question 10

WHAT IS IFRS 10

Answer 10

Consolidated Financial Statements.

Question 11

What are the 3 IFRS 12 disclosure for , subsidiaries , joint ventures and associates

Answer 11

Page 153 (GO READ AND CONFRIM, DO NOT SKIMP OUT)

Question 12

What to do when u acquire an asset that is not a business and when u acquire one that is a business. (i.e has inputs, process and outputs.)

Answer 12

whether
the company acquired is a business or not. Remember if it is a business then you
consolidate and if not then you record the transaction as an asset acqusitoin.

Question 13

What is IFRS 11

Answer 13

Joint Arrangements

Question 14

What is ifrs 12

Answer 14

Disclsoure of interest in other entities.

Question 15

Equity accounting is used to account for ??

Answer 15

Associates and Joint venture or joint control , whereas subsidiaries are consolidated.