***GROUPS*** Flashcards
1
Q
Groups
A
- Parent
- Subsisidiary (If Parent has 50% or more control)
Required to account for the subsidiary is consolidated financial statement.
* 100% of assets & liabilities
* 100% of financial performance (i.e. costs etc.)
1
Q
Joint ventures
Associates
A
JJoint ventures
Apply equity accounting (as shared ownership)
* (Bring is our 50% of post acq for profits for that co)
Associates
Apply equity accounting:
* (Bring is our 50% of post acq for profits for that co)
2
Q
Goodwill
A
Investment in subsidiary, joint venture or associate
(When you pay more than FV of assets acquiring)
(e.g. brand etc)
3
Q
Issues
A
- Incorrect classifications of (subsidiary vs associate)
- Different reporting dates for co’s
- Different reporitng framework (e.g. IFRS for 1 and local for another)
- Related party transactions (disclosures)
- Goodwill impairment (mgmt wont want to impair as is loss- mgmt covers up)
- Component auditors-
4
Q
Component auditor
A
- Experience
- Reputation and trust
- Qualified
- Staff assigned (experienced and competent)
- Independent or related party? (impact objectivity and reliability)
- Regulatory environment for component auditor base- might not be working to same standards.
- Can we actually see their work (practical for us)