Groups

Question 1

How to account for the following
1) control
2) Significant influence
3) Joint control
4) Held for wealth accredtion

Answer 1

1) Subsiduary consolidation
2) Associate, equity accounting
3) Joint venture, equity accounting
4) Trade investment, financial asset

Question 2

W1

Answer 2

The movement in the net assets of the subsid

Question 3

W2

Answer 3

Consolidated goodwill
Consideration
+ NCI % of NA @ aqu
- NCA @ aquisition
- any imparement (CR goodwill DR RE)

Question 4

W3

Answer 4

NCI interest of NCA at reporitng date

Question 5

W4

Answer 5

Consolidated RE
P’2 RE
P% of S movement in RE
- any impairment

Question 6

Intra group Loan

Answer 6

Loan never took place
CR receivabe
DR Loan

Question 7

Intra group trading and cash in transit

Answer 7

Push the cash along
CR receivable then cancel out loan
Asset (4-1-3
Liability 3-3

Question 8

Mark up (25%)

Answer 8

125% Sales Price
25% Mark up
100% Cost

Cost = Sales price /1.25

Question 9

Margin (25%)

Answer 9

100% Sales price
25% margin
75% Cost

Cost = Margin Sales pruce*0.75

Question 10

PURP - S sells to P

Answer 10

Remove the PURP from the buyers inventory. Remove the PURP from the sellers RE

CR Inventory
DR RE - W2

Question 11

PURP - P sells to S

Answer 11

Remove the PURP from the buyers inventory. Remove the PURP from the sellers RE

CR Inventory
DR RE - W5

Question 12

Intra group trading of non current asset

Answer 12

Make adjustment as if the sale had never taken place.
Remove the profit on the sale and any additional depreciation.

Actual CA @ YE (new asset depreciated 1 year) x
CA if transfer has not taken place (x)
PURP x

DR RE
CR PPE

Question 13

How do you treat the following:

Cash in 1 year DF 10%
Shares in 1 year MV @ aquisition £3 FV at date received £3.50

Answer 13

Discount cash to its PV
DR Investment
CR Liability (PV)

Unwind and charge to PoL

Share: Shares always at market value at aquisition
DR Invetsment
CR Shares to me issues (MV at aquisition)

Question 14

What are the two methods of measuring NCI

Answer 14

Fair value method

Proportionate method

Question 15

What does IFRS 3 Business Combinations require

Why do we do step 4&5

Answer 15

The aquirer should recognise the assets and liabilities of the aquiree at fair value at the date of aquisition

Example on PPE
Step 1: Calculate FV difference
Step 2 Calculate the difference in dep’r (need to charge more)
FV difference / UEL

Step 3: Make changes to PPE on face of SFP

Step 4: Account for FV at aquisiton and reporting date

Step 5: Account for extra Dep’r at reporting date

4&5 so the FV adjustment is accounted for in goodwill and RE

Question 16

Basis for consolidated statement of profit or loss

Answer 16

From revenue to profit after tax include 100% of P’s revenue and expenses and 100% of S revenue and expenses W2

After profit after tax deduct share of profits due to non controlling interest W3

Left with balancing figure