IFRS 10 Flashcards
What is a parent?
An entity controls another entity
What is a subsidiary?
Where entity is controlled
Investor controls investee when?
Investor has power over investee
What do consolidated financial statements present?
Presents the assets, liabilities, equity, etc of parent and subsidiaries as if they were a single economic entity
When does a company usually have control?
When it has acquired over 50%
Where is equity capital included in net assets working?
At reporting date and acquisition date (Addition)
Where is share premium included in net assets working?
At reporting date and acquisition date (Addition)
Where is other components of equity included in net assets working?
At reporting date and acquisition date (Addition)
Where is retained earnings included in net assets working?
At reporting date and acquisition date (Addition)
Where is goodwill in accounts to sub included in net assets working?
At reporting date and acquisition date (Deducted)
Where is fair value adjustment included in net assets working?
At reporting date and acquisition date (Added)
Where is PURP if sub is the seller in net assets working?
At reporting date (Deducted)
Post-acq depreciation amonut on FVA in net assets working?
At reporting date (Deducted)
Where does total acquisition in net assets go?
In the goodwill working
Goodwill at acquisition?
FV of purchase consideration + NCI at acquisition - total acquisition in net assets
Total goodwill in SFP calculation?
Goodwill at acquisitioqn - impairment to date
If full goodwill method used?
NCI value = FV at NCI at date of acquisition
If partial goodwill method used?
NCI% at FV of subsidiary’s net assets at acquisition
NCI calculation?
NCI at acquisition + NCI% of post-acquisition movement of net assets - NCI% of goodwill impaired (FV)
Group retained earnings (1st step)
100% parent’s retained earnings
Group retained earnings (2nd step)
Group share of post-acq retained earnings
What happens with gain on bargain purchase?
Added to retained earnings
What happens with goodwill impairment in group retained earnings?
Deducted from retained earnings
What happens with PURP if parent was seller in group retained earnings?
Deducted from retained earnings
PURP double entry?
Debit: Cost of sales
Credit: Inventory
What is GIT?
Parent dispatched goods to subsidiary with selling price. These goods weren’t received until after year end
Share for share exchange?
Shares of subsidiary * P% retained earnings * 2/3 * share price
Goods in transit double entry?
Debit: Inventory
Credit: Payables
Post-acquisition figure?
Reporting figure - acquisition figure
Impairment of positive goodwill (Double entry)
Debit: Expenses
Debit: Retained earnings
Credit: Goodwill
How should contingent consideration be calculated?
Measured at FV and adjust goodwill if at acquisition date
What happens with negative goodwill?
Credit to SPL
Gain from bargain purchase
Dividends paid by subsidiary treatment?
Eliminated on consolidation in both CSFp and CSPL
Dividends paid to NCI treatment?
Not presented in CSFP
Deferred consideration discount rate often referred to as?
Cost of capital
Eliminate intragroup revenue in CSPL?
Debit: Revenue
Credit: Cost of sales
Eliminate unrealised profit in CSPL?
Debit: Cost of sales
Credit: Inventory
Cancel a loan in CSPL?
Debit: Loan payable
Credit: Loan receivable
Eliminate the interest in CSPL?
Debit: Finance income
Credit: Finance expense
Which impairment is included?
Only current year impairment losses included
What happens with dividend income in CSPL?
Is removed
When can a group structure change?
If parent company sells shares in a subsidiary
If there’s a disposal (affect on individual accounts)
Shares sold in parent’s individual accounts
Take proceeds - investment
If there’s a disposal (affect on group accounts)
Sold net assets of subsidiarys + goodwill
Calculate group profit/loss on disposal
Disposal calculation (SPL)
Proceeds (P%)
+ NCI (S%)
- NA on disposal (100%)
- Goodwill (100%)
Is share acquisition included in group retained earnings?
No
Percentage used in RE
Parent’s %
Percentage used in NCI
Subsidiary’s %
When Acquisition amount < net assets
Credit difference to SPL
Negative change in fair value at consideration?
Debit current liabilities
Credit retained earnings
Intragroup sales example?
Consistently made sales of $20000 each month. This is then deducted
Remaining inventory in company?
Added to consolidation
What figure is included in the total equity?
Equity at reporting date + retaiend earnings adjustments
Is retained earnings part of equity?
Yes
Unrealised profit if parent was seller?
Deducted from group retained earnings
Unrealised profit if subsidiary was seller?
Deducted from reporting date of net assets working
Amount of consideration attributable to?
Shares + deferred consideration
An intangible asset that may be recognised separately from goodwill?
A new research project, as research is not capitalised
FV NCI?
Shares * NCI % * value of shares
FVA adjustments
Reducted from total
Uniform accounting policy for IFRS 10 menaing?
Look for IAS 8
Dividend received calculation?
Number of shares * dividend per share
Post-acquisition profits treatment?
Included in retained earnings
If fair value of subsidiary’s contingent liabilities can be reliably measured at date of acquisition?
They should be included in consolidated net assets and increase goodwill
Calculate loan note for consideration?
Shares acquired * $ in loan note/shares acquired
FVA of asset below carrying amount effect on group retained earnings?
Increases GRE
Impairment of goodwill in group retained earnings?
Decreases GRE
