Group Accounts - Consolidated SFP

Question 1

When is control established between a parent and a subsidiary?

Answer 1

When the parent owns more that 50% of the voting power or if the parent owns less than 50% then:

• must have more than half the of the voting rights by agreement
• the power to govern the financial and operating activities
• power to appoint or remove the majority of members of the board of directors
• power to cast the majority of voters at the meeting of the board of directors

Question 2

What are the 6 rules for group SFP?

Answer 2

1. Investment in the subsidiary doesn’t appear.
2. Share Capital & Premium of the parent company is only reported.
3. Assets and Liabilities are added together (together with any adjustments).
4. Goodwill needs to be calculated and shown as an intangible Asset.
5. Retained Earnings needs to be calculated.
6. NCI needs to be calculated.

Question 3

Should goodwill be amortised?

Answer 3

No, it should be considered for impairment

Question 4

What are the 3 things that need adjustments in the consolidated accounts?

Answer 4

1. Intercompany transactions
2. Provisions for unrealised profit
3. Fair values

Question 5

What are provisions for unrealised profit (PUP)?

Answer 5

Where intercompany sales are made at a profit and some inventory remains in stock.

Question 6

Goodwill on the group SFP

Calculation

Answer 6

Cost of investment - X
NCI @ acquisition (Net Asset @ Aquisition X NCI %) - X

Subsidiary Share Capital - (X)
Subsidiary Share Premium - (X)
Subsidiary Retained Earning - (X)
Revaluation Surplus - (X)

Fair value Adjustment - (X)
Goodwill on Acquisition - X

Impairment to date - (X)

Goodwill @ Year End - X

Question 7

Retained Earnings on the group SFP

Calculation

Answer 7

100% Parent Retained Earnings - X

(Subsidiary Y/E Retained Earnings - Retained Earnings at acquisition) X Parents ownership % - X

Goodwill impairment - (X)

PUP Adjustment (100% of adjustment if Parent is seller, % ownership of the PUP if Sub. is seller) - (X)

Fair value depreciation adjustment - (X)

Question 8

Non-controlling Interest

Calculation

Answer 8

Share Capital @ Y/E x NCI % - X
Share Premium @ Y/E x NCI % - X
Retained Earnings @ Y/E x NCI % - X
Revaluation Surplus @ Y/E x NCI % - X
Fair Value Adjustment ( - FV depreciation) @ Y/E x NCI % - X

PUP Adjustment - (X)

Question 9

Group PPE on SPF if there is a Fair Value adjusment & depreciation?

Calculation

Answer 9

100% Parent + 100% Subsidiary + Fair Value Adjustment - Fair Value Depreciation

Question 10

Group Inventory on the SFP if there are Goods in transit / and or PUP adjustment?

Calculation

Answer 10

100% Parent + 100% Subsidiary + Goods in Transit - PUP

Question 11

What is the calculation for Trade and other Receivables on the SFP if there are Cash in transit adjustments?

Answer 11

100% Parent + 100% Subsidiary - Cash in Transit - Intragroup Balance

Question 12

Cash and other Equivalents on the SFP if there are Cash in transit adjustments?

Answer 12

100% Parent + 100% Subsidiary + Cash in Transit

Question 13

Trade and other payables on the SFP if there are Goods in transit adjustments?

Answer 13

100% Parent + 100% Subsidiary + Goods in Transit - Intragroup Balance