Group CR

Question 1

Intra group trading in individual FS

Answer 1

As both companies are seperate legal entities there is no adjusyment made to individual FS

There will just be an IAS24 disclosure as they are related parties.

Question 2

Intra group trading in group accounts

Sale non left in inventory

Answer 2

Group FS are prepared using single entity concept

Therefore any amount arising from trade between P and S needs eliminating (can not trade with yourself)

DR Revenue adj column
CR COS adj column

Question 3

Intra group trading in group accounts

Stock left in inventory

Answer 3

If the seller makes a profit from intragroup trading then inventories of the purcharser will me higher than the orginal costs
Need to reduce inventory so reflects the actualy cost to the group

DR inventory buyer
CR COS PURP seller

Question 4

Loan between P and S (FX)

Answer 4

Under IAS 21 any monetary items denominated in a foregin currency should be translated at the CR with any FX gain or loss recorded in Pnl

Question 5

Interest on loan between P and S

Answer 5

Interest should be accrued in the individual FS

Any interest between P and S should be elimanated when consolidating the FS

Question 6

Calculating good will for foreign sub

Answer 6

1. calculate good will on FX
2. Translate goodwill into £ at the HR
3. Translate goodwill into £ using CR

Diffence is FX gain or loss this is charged to OCI

Rember if using FV method a prorotion of the FX will belong to NCI

Proportionate method all P

Question 7

How to calculate the FX difference on NA on

Answer 7

Compare NA at aquisiton using CR and HR

Compare CY RE using CR and AR

add both differnces to together. Goes to revaluation reserves amd OCI