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

14. Group Accounts: Consolidated SF Position Flashcards

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
Q

Consol: PURP: Difference when the seller is the parent?

A

The profit is shared (i.e. reduced) with the NCI

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26
Q

Consol: Goodwill: What is fair consideration value for: Deferred cash

A

Present value
At acquisition

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27
Q

Consol: Deferred cash consideration: DE

A
  1. DR cost of investment
    CR Liabilities
  2. (Unwind:)
    DR Finance cost
    CR Liabilities
28
Q

Consol: Goodwill: What is fair value consideration for: Shares
(Issues immediately OR deferred)

A

Market value
At acquisition

29
Q

Consol: Goowill: Share consideration: Issued immediately DE

A

DR cost of investment
CR Share capital
CR Share premium

30
Q

Consol: Goodwill: Share consideration: Deferred DE

A

DR cost of investment
CR Shares to be issued

31
Q

Consol: Goowill: What is fair value consideration for: Contingent consideration

A

Fair value (given in the question)

32
Q

Consol: Goodwill: Contingent consideration: Cash: DE

A

DR cost of investment
CR Provision

33
Q

Consol: Goodwill: Contingent consideration: shares DE

A

DR cost of investment
CR shares to be issued

34
Q

Consol: At what date only will the (fair value of) NIC be taken

A

Date of ACQUISITION

35
Q

Consol: What else can you use in the goodwill calc instead of NCI’s% of NA @ Acq? (Fair value method)

A

Fair value of NA @ Acq

36
Q

Consol: Goodwill impairment DE: Proportionate Goodwill calc method

A

DR Retained earnings (W5)
CR Goodwill (W3)

37
Q

Consol: Goodwill impairment DE: Proportionate Fair-value calc method

A

DR Retained earnings (W5)
DR NIC (their share of the g/w (W4)
CR Goodwill (W3)

38
Q

Consol: Does goodwill at fair value include the NIC’s share of the goodwill?

A

Yes

39
Q

Consol: Does goodwill at the proportional method include the NIC’s share of the goodwill?

A

No

40
Q

Consol: Methods of calculating goodwill: IFRS

A
  1. Fair value
  2. Proportional
41
Q

Consol: Max goodwill life: IFRS

A

Unlimited

42
Q

Consol: Goodwill: Method of impairment IFRS

A

Annual impairment review

43
Q

Consol: Goodwill: Maximum life: UK GAAP

A

10y

44
Q

Consol: Goodwill: Impairment method: UK GAAP

A

Amortization over useful life

45
Q

Consol: Goodwill: Impairment method: UK GAAP

A

Amortization over useful life

46
Q

Consol: Methods for calculating goodwill: UK GAAP

A

Only proportionate

47
Q

Consol: intra-group transfers of NCAs calculation

A

CA of NCA at y/e
LESS
CA of NCA at y/e if transfer had not taken place

48
Q

Consol: Intra-group transfer of NCAs treatment

A

DR seller’s R.E.

P - (W5)

S - (W2)

CR NCA on CSFP

49
Q

Consol: Acquisition costs: Treatment of professional fees and other incremental costs?

A

Expensed in period

50
Q

Consol: Acquisition costs: Treatment of share issue costs treatment?

A

DR share premium

51
Q

Consol: Treatment of changes is fair value of contingent consideration?

A

Adjusted prospectively

(Change in accounting estimate)

52
Q

Consol: Treatment of changes is fair value of contingent consideration: Exception

A

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
Q

Consol: Treatment of changes is fair value of contingent consideration: Treatment if contingent consideration is in shares

(I.e. classified as equity)

A

Not remeasured

Instead:

Subsequent settlement recongnised as part of equity

54
Q

Consol: What value to recognise assets at?

A
  1. Identifiable assets, liabilities and contingent liabilities of the acquiree
  2. At fair value
  3. At date of acquisition
55
Q

Consol: How to include fair value in the workings: At acquisition

A

Adjust the net assets workings (W2)

To bring the assets to fair value

(This will affect goodwill)

56
Q

Consol: How to include fair value in the workings: At reporting date

A

Adjust on the face of the CSFP

AND

in the net assets working
(Which will affect W4 NCI)

57
Q

Consol: Places to adjust for fair value

A

At acquisition: Net assets

At RD: Net assets AND CSFP

58
Q

Consol: Fair value: Depn treatment

A

Charged on fair value adjustments from the point of acq

59
Q

Consol: Treatment: Goodwill in S’s accounts
E.g. from purchase of sole trader

A

Removed from NAs (W2)
Must not appear on CSFP

60
Q

Consol: Treatment: Intangibles not recognized in S
(Because do not need IAS)

A

FV should be recongised in NAs and CSFP
(Put it in the brackets)

61
Q

Consol: Treatment: Contingent liabilities disclosed in S’s books

A

Should be included in SCFP and W2 (NAs)
At fair value

62
Q

Consol: What to do if FVs not known at RD after Acq?

A

Provisional FVs

63
Q

Consol: Adjusting provisional FVs: Made within measurement period

A

Adjustment made retrospectively

Goodwill recalculated

64
Q

Consol: Adjusting provisional FVs: Measurement period

A

12m from acq date

65
Q

Consol: Adjusting provisional FVs: Made outside measurement period

A
  1. Treated as change in accounting estimate
    So adjusted prospectively
  2. Impairment review performed
66
Q

Consol: UK GAAP difference: Acq costs

A

Included within consideration

Not treated as expense in period

67
Q

Consol: UK GAAP difference: recognition of identificable intangible assets

A

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

  1. Separable

AND

3, Arise from contractual or other legal rights

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