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Z FAR > Group Accounts > Flashcards

Group Accounts Flashcards

0
Q

CSFP W2

A

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.

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1
Q

CSFP W1

A

Group Structure

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2
Q

CSFP W3

A

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

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3
Q

What effect does Goodwill (at acquisition) being positive or negative have?

A

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)

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4
Q

CSFP W4

A 
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

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5
Q

CSFP W5

A

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

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6
Q

CSFP W6 (and when is it required?)

A

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

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7
Q

CSFP “easy marks”

A

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…

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8
Q

CSFP group structure

A

W1

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9
Q

CSFP Net assets of subsidiary

A

W2 (required before W3-5 can be completed)

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10
Q

CSFP Goodwill

A

W3

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11
Q

CSFP NCI

A

W4

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12
Q

CSFP Group retained earnings

A

W5

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13
Q

CSFP - if there has been post acquisition movement in the group’s revaluation reserve….?

A

W6

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14
Q

Inventory PURP

A

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)
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15
Q

NCA PURP

A

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)
16
Q

FV uplift on inventory

A

Impacts CSFP (brackets) and W2 (@ SFP)

17
Q

FV uplift on PPE

A

Impacts CSFP - PPE (100% P + 100%S + FV uplift - FV dpn)

W2: add FV (acq&SFP) uplift less FV dpn (SFP)

18
Q

FV uplift on intangibles

A

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.)

19
Q

FV uplift on contingent liability

A

Impact CSFP provisions and W2

20
Q

Provisional Fair Value

A

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.

21
Q

CIS W1

A

Group structure

22
Q

CIS W2

A

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

23
Q

CIS W3

A

Non-Controlling Interest

NCI% x S’s PAT (W2)

24
Q

CIS - “the final product”

A

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)

25
Q

CIS mid year acquisitions

A

If S acquired mid yr then pro rate

W1 - include yr owned fraction

W2 - include fraction and pro rate column S

26
Q

CIS intra-group transactions

A

Purchases and sales must be eliminated via W2 adj. column

Dr Revenue
Cr Cost of Sales

27
Q

CIS inventory PURP

A

Inventory adjustment already included in CSFP

Reduce profit by increasing cost of sales in The seller’s column

28
Q

CIS intra group dividends

A

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

29
Q

CIS Transfers of Non-Current Assets

A

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

30
Q

CIS Intra-group interest & management charges

A

Such charges payable in S and receivable in P should be cancelled against each other

31
Q

CIS goodwill impairments

A

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.

32
Q

CSOCE - pro forma

A

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

33
Q

CSOCE - mid yr acquisitions

A 
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
34
Q

Profit from discontinued operations

A

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
35
Q

related party transaction

A

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

36
Q

Remember fair value adjustments on NCA (tangible/intangible)…

A

Adjust depreciation / amortisation

Z FAR (4 decks)

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