Groups: Buisness Combinations Flashcards
(16 cards)
What is the formula for profit/ loss on disposal where there is a disposal and control is lost
What are the journal entries
Proceeds»_space;»»>Dr Bank
FV of remaining interest»_space;»» Dr Investment in assoc
»»»»»»»»»CR disposal of sub
Less:
Net assets at disposal»_space; Dr Disp of sub, Cr consolidated net assets
Goodwill»_space;>Dr disp of sub, Cr Goodwill
(NCI at disposal)»> Dr disp of sub, Cr NCI at disposal
Net debit/ credit of the ‘disp of subs’ is the gain or loss on disposal
If a parent has control over a subsidiary, what does it have over an associate
Significant influence
Would two subsidiaries be considered related parties with each other
Yes
Would a subsidiary and an associate be considered related parties
Yes
Would 2 associates be considered related parties
No
2 companies one is a sub of the parent and the other is an associate. Who would need to disclose RPT in their accounts
Sub and assoc transactions within the consolidated accounts, individual accounts of each of the sub and assoc but not the individual accounts of the parent
What are the 6 main audit considerations for a new subsidiary in the year
- Valuation of assets and liabilities: at FV under IFRS 13
- Valuation of consideration: at FV
- Goodwill: calculated and accounted for in accordance with IFRS 3
- Date of control: only consolidate from date of aqn
- Accounting policies/ reporting periods: consistent across the group
- Consolidation adjustments
What is the first step of a step acquisition
How do you calculate it
Calculate the deemed gain or loss on disposal
(Carrying amount of original investment)
FV of investment at date control is achieved
Total is the gain or loss»_space;» goes to P/L or OCI depending on classification of original investment
What is the second step of a step acquisition
How do you calculate it
Goodwill
Consideration
NCI
FV of investment at date control achieved
(Net assets)
= Goodwill
What are the two options if a subsidiary does not have the same year end date
- Sub can produce additional statements to the reporting date of the rest of the group
- Sub FS may be used for consolidation as long as the gap is 3 months or less and adjustments are made for the effects of significant transactions
What is is called where there is an addition or disposal where control is maintained
Transaction between the owners
How do you calculate the removal of NCI where you have made an addition and control is maintained
Cash paid
Less transfer of net assets relating to NCI
Shareholders Equity
Dr NCI
Dr Equity
CR Cash
Which accounting standard tells you when you have control over an entity
IFRS 10
What are 2 easy marks for any questions where you mention goodwill
- Should be reviewed annually for impairment
- IFRS 3 requires the splitting from goodwill of any intangibles given that they are separable
Which accounting standard deals with associates and significant influence
IAS 28
How do you deal with an impairment of a subsidiary
What accounting standard deals with this
According to IAS 36 , the impairment is first allocated against goodwill and then to other non-current assets on a pro-rata basis
