Group Accounts Flashcards
CSFP W2
Net assets of subsidiary (one working required for each sub)
NA@SFP. NA@acq. movement
SC. x. x. -
Rev Res. x. x. x. -> W6
RE. x. x. x. -> W5
x ->W4. x ->W3.
CSFP W1
Group Structure
CSFP W3
Goodwill
Consideration. x
add NCI (NCI% x NA @ acq (W2) x
or FV of NCI @ acq)
less 100% NA of S @ acq(W2). (x)
Goodwill at acq. x
less cumulative impairments to GW. (x)
GW @ year end. x. -> CSFP
What effect does Goodwill (at acquisition) being positive or negative have?
If positive: GW is an intangible asset - tested every year for impairment
If negative: “Gain in bargain purchase” - treated as an instant profit in CIS and group retained earnings (W5)
CSFP W4
Non-Controlling Interest (NCI) either: Share of net assets method - NCI% x NA of S @ SFP (W2) or: Fair Value method: FV of NCI @ acq add NCI'% x S's post acq NA(W2) less NCI% x impairments to goodwill
total NCI @ SFP
CSFP W5
Group retained earnings
100% P’s RE. x
P’s % of S’s post acq RE (W2). x
less cumulative impairments to GW (W3). (x)
Add gain on bargain purchase (W3). x
Total group retained earnings. x. -> CSFP
CSFP W6 (and when is it required?)
Group revaluation reserve (only required if there is any post acquisition movement in group rev res)
100% P’s rev res. x
P’s % of S’s post acq rev res (W2). x
Group Revaluation reserve. x. -> CSFP
CSFP “easy marks”
P’s share capital
Bracketed workings:
100% of P’s and S’s assets and liabilities - leave open for PURP….
inventory (100%P, 100%S - leave open for PURP…
CSFP group structure
W1
CSFP Net assets of subsidiary
W2 (required before W3-5 can be completed)
CSFP Goodwill
W3
CSFP NCI
W4
CSFP Group retained earnings
W5
CSFP - if there has been post acquisition movement in the group’s revaluation reserve….?
W6
Inventory PURP
Remove intra group trading for. revenue and CoS
and:
Step 1: PURP = Profit element x stock remaining at y/e
Step 2: Dr RE (if P is seller - W5, is S is seller - W2)
Cr Inventory (bracketed workings)
NCA PURP
Step 1:
remove unrealised profit from books of seller
plus excess dpn:
CV of NCA at Y/E after transfer. x
CV of NCA at Y/E if transfer hadn’t taken place. (x)
NCA PURP. x
Step 2: Dr Retained earnings (if P is seller - W5, if S is seller - W2)
Cr PPE (bracketed workings in CSFP)
FV uplift on inventory
Impacts CSFP (brackets) and W2 (@ SFP)
FV uplift on PPE
Impacts CSFP - PPE (100% P + 100%S + FV uplift - FV dpn)
W2: add FV (acq&SFP) uplift less FV dpn (SFP)
FV uplift on intangibles
Impacts CSFP: add FV up less FV amortisation
same for W2 less goodwill on S’s books
(remember goodwill in books of S is not recognisable so must be removed.)
FV uplift on contingent liability
Impact CSFP provisions and W2
Provisional Fair Value
measurement period = 12 months after acquisition date
either:
Confirmation of FV within measurement period - adjust retrospectively - goodwill recalculated with final FV - increase/decrease in assets/liabilities in CSFP
or:
Confirmation outside of measurement period - treated as a change in accounting estimate - adjust prospectively - GW not recalculated - impairment review is performed.
CIS W1
Group structure
CIS W2
Consolidation schedule
P. S. Adj. Total Revenue. CoS Operating expenses Finance Cost Investment income Tax
Total
Total S (PAT) to W3
Total adj must sum to zero
Total column to CIS
CIS W3
Non-Controlling Interest
NCI% x S’s PAT (W2)
CIS - “the final product”
Revenue (W2)
CoS (W2)
Gross profit (Sum) Operating expenses (W2)
Operating profit (Sum) Finance Cost (W2) Investment Income (W2)
PBT (Sum) Tax expense (W2)
PAT (Sum)
Attributable to P (Balance)
Attributable to NCI (W3)
Total (=PAT)
CIS mid year acquisitions
If S acquired mid yr then pro rate
W1 - include yr owned fraction
W2 - include fraction and pro rate column S
CIS intra-group transactions
Purchases and sales must be eliminated via W2 adj. column
Dr Revenue
Cr Cost of Sales
CIS inventory PURP
Inventory adjustment already included in CSFP
Reduce profit by increasing cost of sales in The seller’s column
CIS intra group dividends
Payment of div. by S to P needs to be cancelleo
Reduce investment income in P’s column by P’s share of the dividend paid.
note: S’s investment income can be left
CIS Transfers of Non-Current Assets
PURP composed of:
- Profit on disposal
- Extra dpn. charged since transfer
The whole PURP adjusted through the seller’s column of W2 in the expense through which dpn. is charged
CIS Intra-group interest & management charges
Such charges payable in S and receivable in P should be cancelled against each other
CIS goodwill impairments
Once identified during the year:
- Passed through W2, usually under operating expenses.
Note: if GW calculated using FV method, NCI share of PAT needs to be adjusted for NCI share of impairment.
CSOCE - pro forma
SC. RE. Total. NCI. Total
B/F. x. x. x. x. x
TCI for the yr. - x. x. x. x
Divs paid. - (x) (x) (x) x
C/F. x. x. x. x. x
TCI for the yr: taken from CSI split (P-RE, S - NCI)
SC: Just the parent’s OSC
Divs paid: RE-just P’s div, NCI-div s paid to NCI
C/F: NCI - from CSFP W4 - NCI% x S’s NA @ SFP
CSOCE - mid yr acquisitions
New sub enters group: - needs to be shown in CSOCE in NCI column (share of net assets or FV method) e.g. B/F. x TCI. x Divs. (x) Added in acq. x C/F. x
Profit from discontinued operations
Profit from disposal of sub:
Proceeds - CV of goodwill @ disposal - Sub Net assets @ disposal Add back attributable to NCI = Profit in Disposal \+ Sub profit for the year = Profit from discontinued operations
related party transaction
IAS 24 related party disclosure
requires disclosure of aggregate amount of the transactions between related parties subsequent to appointment + any outstanding balances
Arms length not exempt from disclosure but can be noted if evidence to support
Remember fair value adjustments on NCA (tangible/intangible)…
Adjust depreciation / amortisation
