Group Accounts/Consolidated Accounts Flashcards
what % of ownership means there is control
50% or more
what are the relevant financial reporting standards relating to group accounting
IFRS 3 Business Combinations
IFRS 10 Consolidated Financial Statemeents
what % is an associate
20 to 50
ie has significant influence but not control
what is the importance of consolidated accounting
to show substance and economic reality
for shareholders to understand the subsidiaries as well as the parent
what should be done with intra-group transactions
cancelled
examples of intragroup transactions
intra group sales
intra group lending
intra group buying of non current assets eg machinary
what is goodwill
when the parent company has paid more than fair value of the subsidiaries worth
i.e. because of reputation, morale etc not measurable on balance sheet
how often is goodwill tested for impairment
annually
does not need a trigger
where is negative goodwill recognised
as income and increases the groups reserves
where does NCI go in group account
under equity
what are the two methods of measuring NCI
proportion of net assets method
fair value method
how does the proportion of net assets method work
NCI’s share of net assets
excluding goodwill
how does the fair value method work
measured on date of acquisition
goodwill impairment allocated
what are the 4 methods of paying for investments
Cash
Deferred consideration (pay at a later date - remember to discount)
Contingent consideration (payment depends on certain conditions being met - included as long as it can be measured reliably)
Share exchange (parent issues its own shares in exchange for shares in subsidiary)
what happens to amounts in current accounts that relate to intra group transcations
cancelled
