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FAR > 14. Group Accounts: Consolidated SF Position > Flashcards

14. Group Accounts: Consolidated SF Position Flashcards

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1
Q

Consol: The 5 basic consol SFP workings

A
  1. Group structure
  2. Net assets of the sub(s)
  3. Goodwill
  4. NCI
  5. Group retained earnings
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2
Q

Consol: Net assets of sub: How to calculate to make it quicker?

A

Equity

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3
Q

Consol: Net assets of sub: At which 2 dates

A
  1. Reporting date
  2. Acquisition date

(I.e. reporting and post-aquis movement)
(So 3 columns actually (+ PA mov))

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4
Q

Consol: Net assets of sub: Which 2 are the same at both dates?

A
  1. Share capital
  2. Share premium
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5
Q

Consol: Net assets of sub: Which 2 do you need to know the post acquis amount too? (For dates)

A
  1. Reval surp
  2. Retained earnings
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6
Q

Consol: Goodwill: Where is the consideration?

A

Net assets on acquisition

Aka investment in S

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7
Q

Consol: Goodwill (at Acq): Calculation

A

Consideration

PLUS

NCI’s Sh of S’s NAs @ Acq

MINUS

100% of S’s NAs @ Acq

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8
Q

Consol: Goodwill: How to deal with subsequent things after Acq e.g. impairment

A

Add for each year to reporting date
(Because cumulative)

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9
Q

Consol: What to do if goodwill negative?

IFRS

A
  1. Rename: Gain on bargain purchase
  2. Recognize profit immediately in P&L
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10
Q

Consol: What to do if goodwill negative?

UK GAAP

A

Amortize negative goodwill

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11
Q

Consol: NCI calculation

A

NIC’s % of S’s NA @ Reporting

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12
Q

Consol: Retained Earnings calculation

A

100% P’s RE

PLUS

P’s % NA & RE

(MINUS Goodwill Impairment)

(PLUS Gain on bargain purchase)

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13
Q

Consol: What to do if acquisition part way through period and acquisition cost not given?

A

Pro-rate

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14
Q

Consol: The 2 types of intra-group transaction?

A
  1. Loans
  2. Trading
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15
Q

Consol: What to do about intra-group interest

A

Cancel out the finance income/cost

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16
Q

Consol: Intra-group loans: What to do about unpaid interest?

A

Remove

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17
Q

Consol: Intra-group trading: How to deal with timing differences e.g. cash in transit?

A

Treat as received

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18
Q

Consol: General aim with intra-group transactions?

A

Cancel out

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19
Q

Consol: Adjusting cash in transit DE

A

DR Cash in transit
CR Receivables current account

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20
Q

Consol: Adjusting goods in transit DE

A

DR Inventory
CR Payables current account

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21
Q

Name of the intra-group receivable and payable accounts?

A

‘Current’ account

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22
Q

Consol: Provision on unrealized profit: Sub sold all goods outside group

A

No adjustment needed
(But original sale still needs to be eliminated)

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23
Q

Consol: Provision on unrealized profit: Sub not sold all goods outside group

A

Adjustment needed

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24
Q

PURP adjustment DE

A

DR COS of seller
CR Inventory

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25
Consol: PURP: Difference when the seller is the parent?
The profit is shared (i.e. reduced) with the NCI
26
Consol: Goodwill: What is fair consideration value for: Deferred cash
**Present value** At acquisition
27
Consol: Deferred cash consideration: DE
1. DR cost of investment CR Liabilities 2. (Unwind:) DR Finance cost CR Liabilities
28
Consol: Goodwill: What is fair value consideration for: Shares (Issues immediately OR deferred)
**Market value** At acquisition
29
Consol: Goowill: Share consideration: Issued immediately DE
DR cost of investment CR Share capital CR Share premium
30
Consol: Goodwill: Share consideration: Deferred DE
DR cost of investment CR Shares to be issued
31
Consol: Goowill: What is fair value consideration for: Contingent consideration
Fair value (given in the question)
32
Consol: Goodwill: Contingent consideration: Cash: DE
DR cost of investment CR Provision
33
Consol: Goodwill: Contingent consideration: shares DE
DR cost of investment CR shares to be issued
34
Consol: At what date only will the (fair value of) NIC be taken
Date of ACQUISITION
35
Consol: What else can you use in the goodwill calc instead of NCI's% of NA @ Acq? (Fair value method)
*Fair value* of NA @ Acq
36
Consol: Goodwill impairment DE: Proportionate Goodwill calc method
DR Retained earnings (W5) CR Goodwill (W3)
37
Consol: Goodwill impairment DE: Proportionate Fair-value calc method
DR Retained earnings (W5) DR NIC (their share of the g/w (W4) CR Goodwill (W3)
38
Consol: Does goodwill at fair value include the NIC's share of the goodwill?
Yes
39
Consol: Does goodwill at the proportional method include the NIC's share of the goodwill?
No
40
Consol: Methods of calculating goodwill: IFRS
1. Fair value 2. Proportional
41
Consol: Max goodwill life: IFRS
Unlimited
42
Consol: Goodwill: Method of impairment IFRS
Annual impairment review
43
Consol: Goodwill: Maximum life: UK GAAP
10y
44
Consol: Goodwill: Impairment method: UK GAAP
Amortization over useful life
45
Consol: Goodwill: Impairment method: UK GAAP
Amortization over useful life
46
Consol: Methods for calculating goodwill: UK GAAP
**Only** proportionate
47
Consol: intra-group transfers of NCAs calculation
CA of NCA at y/e LESS CA of NCA at y/e *if transfer had not taken place*
48
Consol: Intra-group transfer of NCAs treatment
DR **seller's** R.E. P - (W5) S - (W2) CR NCA on CSFP
49
Consol: Acquisition costs: Treatment of professional fees and other incremental costs?
Expensed in period
50
Consol: Acquisition costs: Treatment of share issue costs treatment?
DR share premium
51
Consol: Treatment of changes is fair value of contingent consideration?
Adjusted *prospectively* (Change in accounting estimate)
52
Consol: Treatment of changes is fair value of contingent consideration: Exception
When the change related to conditions that existed *at the acquisition date* AND Occurs within **1y** from acq date In that case: **retrospectively** adjust With a CORRESPONDING ADJUSTMENT TO GOODWILL
53
Consol: Treatment of changes is fair value of contingent consideration: Treatment if contingent consideration is in shares (I.e. classified as equity)
**Not** remeasured Instead: Subsequent settlement recongnised as part of *equity*
54
Consol: What value to recognise assets at?
1. Identifiable assets, liabilities and contingent liabilities of the acquiree 2. At **fair value** 3. At date of acquisition
55
Consol: How to include fair value in the workings: At acquisition
Adjust the net assets workings (W2) To bring the assets to fair value (This will affect goodwill)
56
Consol: How to include fair value in the workings: At reporting date
Adjust on the face of the CSFP **AND** in the net assets working (Which will affect W4 NCI)
57
Consol: Places to adjust for fair value
At acquisition: Net assets At RD: Net assets AND CSFP
58
Consol: Fair value: Depn treatment
Charged on fair value adjustments from the point of acq
59
Consol: Treatment: Goodwill in S's accounts E.g. from purchase of sole trader
Removed from NAs (W2) Must not appear on CSFP
60
Consol: Treatment: Intangibles not recognized in S (Because do not need IAS)
FV *should* be recongised in NAs and CSFP (Put it in the brackets)
61
Consol: Treatment: Contingent liabilities disclosed in S's books
Should be included in SCFP and W2 (NAs) At **fair value**
62
Consol: What to do if FVs not known at RD after Acq?
Provisional FVs
63
Consol: Adjusting provisional FVs: Made within measurement period
Adjustment made retrospectively Goodwill recalculated
64
Consol: Adjusting provisional FVs: Measurement period
**12m** from acq date
65
Consol: Adjusting provisional FVs: Made outside measurement period
1. Treated as *change in accounting estimate* So adjusted prospectively 2. *Impairment review* performed
66
Consol: UK GAAP difference: Acq costs
Included within consideration Not treated as expense in period
67
Consol: UK GAAP difference: recognition of identificable intangible assets
MUST recognise identifiable intanglbes of the qcuiree separsately from goodwill IF: 1. Meet recongitoin criteria (probable economic benefits wil flow & FV can be measured reliably) AND 2. Separable AND 3, Arise from contractual or other legal *rights*

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