Group Accounts Major Calculations in Depth (IMPORTANT)

Question 1

3 major & 3 minor calculations for Consolidated Statements

Answer 1

Major
Goodwill,
Non-controlling interest,
Consolidated retained earnings

Minor (these will be used within the major calculations)
Fair value adjustments,
Unrealised Profit Adjustments,
Consistentaccounting policy adjustments

Question 2

Goodwill Working layout

Answer 2

Fair value of purchase consideration:
Cash
Shares issued in parent (if any) - Amount of shares x Share-Price at acquisition

Non-controlling interest at acquisition date:
Amount of shares in subsidiary not owned by Parent (find this in Equity section of subsidiary’s SoFP) x Share-price at acquisition

Total value of subsidiary at acquisition:

less: identifiable net assets of subsidiary at acquisition:

Goodwill arising at acquisition:

Question 3

Consolidated Retained Earnings Working Layout

Answer 3

Parent’s contribution to RE:
Per separate financial statements (Parent Retained Earnings):
Any of the 3 minor adjustments e.g. if goodwill is impaired subtract it from parents RE:

Subsidiary’s contribution to RE:
Post-acquisition profits:
Less Dividends (take away any issued dividends post-acquisition - Only take dividends for subsidiary, NOT PARENT)
Any of the 3 minor adjustments:
Subsidiary’s adjusted post-acquisition contribution:
Percentage of ownership e.g. parents only owns 80% so calculate 80% of subsidiary’s retained earnings to put towards final consolidated RE:

Question 4

Non controlling Interestat Reporting Date

Answer 4

Do after goodwill and Retained earnings as we need figures from both.

Non-controlling interest at acquisition (from Goodwill working)
Subsidiary’s adjusted post-acquisition reserves (from Consolidated REs)
Non-controlling share (e.g. 20% so x subsidiary’s adjusted REs by 20%)

Non-controlling interest at reporting date:

Question 5

Calculating Identifiable Net Assets at Acquisition

Answer 5

Start with net assets at start of year or year end depending on which one is given.
Net assets = equity so try to take starting net asset figure from the Statement of Changes in Equity if if its given rather than the one from the SoFP

If end of year, get profit for the year from Income Statement, make any Fair Value or Unrealised Profit Adjustments, and then divide by 2 (assuming that profits for year were earned evenly. If they were not then calculate it differently e.g. 25% earned post acquisition). Subtract this figure from net assets at end of year/ add if given pre acquisition net assets.

Question 6

URP calculations !Important!

Answer 6

Remove the profit from: Retained Earnings & Inventories

remove the entire transaction value from BOTH COMPANIES IN YOUR CONSOLIDATED ACCOUNT: Current liabilities and Trade Recievables