Group Accounting Basic groups Flashcards
Chapter 9
Where is the gain from bargain purchase recorded
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
How are subsidiarys financial satements accounted for by the parent
Subsidiaries financial statements are completely consolidated by the parent
Hoe are the associates financial statements accounted for by the parent
The are accounted for by using the equity method
What is IFRS 3
Business combination
What are the exclusion from consolidation
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.)
What is bargain purchase
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.
Between how long is goodwill revewed for impairment
Annually
Under the revised IFRS, ALL direct cost of acquisition, must be capitalised or expensed
they must be expensed.
Contigent consideration , what are the types and which are remeasured
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.
WHAT IS IFRS 10
Consolidated Financial Statements.
What are the 3 IFRS 12 disclosure for , subsidiaries , joint ventures and associates
Page 153 (GO READ AND CONFRIM, DO NOT SKIMP OUT)
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.)
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.
What is IFRS 11
Joint Arrangements
What is ifrs 12
Disclsoure of interest in other entities.
Equity accounting is used to account for ??
Associates and Joint venture or joint control , whereas subsidiaries are consolidated.
