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CONSOLIDATIONS IFRS 10
IAS 27
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Key definitions
Consolidated financial statements Financial statements of a group in which A, L, OE, I and
E of parent and its subsidiaries are presented as those ofa single economic entity
Parent An entity that controls one or more entities
Subsidiary An entity that is controlled by another entity
Control
(IFRS 10: Appendix A)
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Control IFRS 10 identifies three elements of control
1. Power over investee
2. Exposure, or rights to variable returns frominvolvement with the investee
3. Ability to use power over the investee to affect theamount of the investor’s returns(IFRS 10:7)
An investor must possess all three elements toconclude it controls an investee. Conclusion isreassessed if there is an indication to at least one ofthe three elements.
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Elements of control: (1) Power The investor has existing rights that gives it the ability to direct
the relevant activities (activities that significantly affect theinvestee’s returns)
Power arises through Voting rights
such as when power over an investee is obtained directly and solely fromthe voting rights granted by equity instruments such as shares (oftenstraightforward)
Contractual arrangements when power results from one or more contractual arrangements (often
more complex)(IFRS 10:11)
Investor may have special relationship with investee thatindicates that it has power over the investee Investee’s operations are dependant on the investor Investee’s key management personnel are current or previous
employees of the investor Significant portion of the investee’s activities are conducted for the
investor.4
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Elements of control: Power (ctd ) Substantive v protective rights
IFRS 10 specifies that only substantive rights are considered inassessing power
Gives holder practical ability to exercise the rights when decisionsneed to be made
Investor with protective rights would not have power over an
investee Eg, Right to approve new debt financing
(IFRS 10:11-14)
Considerations relating to voting rights
Power with a majority of voting rights Majority of voting rights but no power
Power without a majority of voting rights
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Power with a majority of voting rights
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An investor that holds more than half of the voting rights ofan investee has power in the following situations
the relevant activities are directed by a vote of the holder ofthe majority of the voting rights, or
a majority of the members of the governing body that directsthe relevant activities are appointed by a vote of the holder ofthe majority of the voting rights
(IFRS 10: B35)
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Majority of voting rights but no power For an investor that holds more than half of the voting rights of
an investee, to have power over an investee,
the investor’s voting rights must be substantive
and must provide the investor with the current ability to direct therelevant activities
If another entity has existing rights that provide that entity with
the right to direct the relevant activities and that entity is not anagent of the investor, the investor does not have power over theinvestee.
An investor does not have power over an investee, even thoughthe investor holds the majority of the voting rights in theinvestee, when those voting rights are not substantive.
Eg, if the relevant activities are subject to direction by agovernment, court, administrator or regulator.
(IFRS 10: B36, B37)7
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Power without a majority of voting rights
An investor can have power even if it holds less than a
majority of the voting rights of an investee, for example,through:
a contractual arrangement between the investor and other vote holders
rights arising from other contractual arrangements the investor’s voting rights
potential voting rights
a combination of the above
(IFRS 10: B38)
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Example 1: Power, voting rights
9
An investor acquires 48 per cent of the voting rights of an investee.
The remaining voting rights are held by thousands of shareholders,none individually holding more than 1 per cent of the voting rights.None of the shareholders has any arrangements to consult any of theothers or make collective decisions. When assessing the proportionof voting rights to acquire, on the basis of the relative size of the
other shareholdings, the investor determined that a 48 per centinterest would be sufficient to give it control.
In this case, on the basis of the absolute size of its holding and therelative size of the other shareholdings, the investor concludes that it
has a sufficiently dominant voting interest to meet the powercriterion without the need to consider any other evidence of power.
(IFRS 10: B43, Eg 4)
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Example 2: Power, voting rightsInvestor A holds 40 per cent of the voting rights of an investee andtwelve other investors each hold 5 per cent of the voting rights of the
investee. A shareholder agreement grants investor A the right toappoint, remove and set the remuneration of management responsible
for directing the relevant activities. To change the agreement, a two-thirds majority vote of the shareholders is required.
In this case, investor A concludes that the absolute size of theinvestor’s holding and the relative size of the other shareholdings aloneare not conclusive in determining whether the investor has rightssufficient to give it power.
However, investor A determines that its contractual right to appoint,
remove and set the remuneration of management is sufficient toconclude that it has power over the investee.
(IFRS 10: B43, Eg 5
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Example 3: Power, voting rights
Investor A holds 45 per cent of the voting rights of aninvestee. Two other investors each hold 26 per cent of the voting rights of the investee. The remaining voting rightsare held by three other shareholders, each holding 1 percent. There are no other arrangements that affect decision-
making.In this case, the size of investor A’s voting interest and itssize relative to the other shareholdings are sufficient toconclude that investor A does not have power . Only twoother investors would need to co-operate to be able to
prevent investor A from directing the relevant activities ofthe investee.
(IFRS 10: B44, Eg 6)
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Elements of control: Power (ctd )
Relevant activities for entities whose operations aredirected through voting rights are generally its operatingand financing activities.
May be situations where voting rights are less relevantbecause rights relate to administrative tasks only
Analysis of investor’s contractual and non-contractual rightsmay be necessary
Appoint key management personnel
Veto significant transactions
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E l P l i i i
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Example: Power, relevant activities
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Two investors form an investee to develop and market a medical product. One investor isresponsible for developing and obtaining regulatory approval of the medical product.Once the regulator has approved the product, the other investor will manufacture and
market it.If all the activities—developing and obtaining regulatory approval as well asmanufacturing and marketing of the medical product—are relevant activities, eachinvestor needs to determine whether it is able to direct the activities that mostsignificantly affect the investee’s returns. Accordingly, each investor needs to consider whether developing and obtainingregulatory approval or the manufacturing and marketing of the medical product is theactivity that most significantly affects the investee’s returns and whether it is able todirect that activity. In determining which investor has power, the investors wouldconsider:(a) the purpose and design of the investee;
(b) the factors that determine the profit margin, revenue and value of the investee as wellas the value of the medical product;(c) the effect on the investee’s returns resulting from each investor’s decision-makingauthority with respect to the factors in (b); and (d) the investors’ exposure to variabilityof returns
(IFRS 10:B13, Eg 1
El t f t l (2) E
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Elements of control: (2) Exposure, or
rights to variable returns
Returns must have the potential to vary as a result of theinvestee’s performance
Can be positive, negative or both
Examples
Change in value of investment Dividends or interest
Management or service fees(IFRS 10:15)
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El f l (3) Abili
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Elements of control: (3) Ability to use
power to affect returns
This considers the interaction between the first two controlconcepts
An investor with decision-making rights determines whether it is a principal or an agent.
An investor that is an agent does not control an investee whenit exercises decision-making rights delegated to it.(IFRS 10:17, 18)
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SEPARATE FINANCIAL STATEMENTS OF
THE PARENT
The investment in a subsidiary is accounted for in theseparate financial statements of the parent at cost
Dr Investment in subsidiary
Cr Bank
The parent records all dividends received or receivable fromthe subsidiary with the following j/e
Dr Bank / Dividend receivable
Cr Dividend income
(IAS 27)
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CONSOLIDATION OF WHOLLY OWNED
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CONSOLIDATION OF WHOLLY OWNED
SUBSIDIARY AT ACQUISITION Parent / subsidiary relationship comes about as a result
of a business combination IFRS 3 defines a business combination as a transaction or
event in which the acquirer obtains control of one or morebusinesses
IFRS 3 requires acquisition method to be used Identification of acquirer
Determination of acquisition date
Recognition and measurement of
Identifiable assets and liabilities assumed
Any non-controlling interest in subsidiary
Recognition and measurement of goodwill or gain from bargain purchase option
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Recognition and measurement of goodwill or
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Recognition and measurement of goodwill or
gain from bargain purchase option Internally generated goodwill not recognised as intangible
asset When goodwill is purchased in a business combination, it
may be recognised as an intangible asset GW is defined in IFRS 3 as the excess of
the acquisition date fair value of the consideration transferred
over
the acquisition date fair value of the net amount of identifiableassets acquired and liabilities assumed
(this definition will be modified when dealing with partly-owned subsidiariesand non-controlling interests)
GW is thus the future economic benefits arising from assetsthat are not capable of being individually identified andseparately recognised.
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Eg 1 Consolidation at acquisition: Goodwill
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Eg 1- Consolidation at acquisition: GoodwillS plcSTATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 20X1
Other assets 3030
Share capital 20
Retained earnings 10
30
19
P plcSTATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 20X1
(a) (b) (c)Other assets 120 105 125
Investment in S 30 45 25
150 150 150
Share capital 100 100 100
Retained earnings 50 50 50150 150 150
On 31 December 20X1 P Limited acquired 100% of the ordinary share capital of S plc for(a) £30(b) £45(c) £25
The other assets of S plc consist of inventory and accounts receivable which are considered to befairly valued.Required: Prepare a consolidated SOFP at 31 December 20X1.
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Eg 1 - Procedure
Analyse equity of subsidiary for at acquisition adjustments Offset (eliminate) the carrying amount of the parent’s
investment in the subsidiary (in P’s records as a Dr balance)against the capital and reserves of S at date of acquisition (inS’s records as Cr balances)
Combine like items of assets, liabilities, equity, income andexpenses of the parent with those of its subsidiary
(IFRS 10:B86)
On the consolidated SOFP, the assets and liabilities of S
replace the amount recorded by P as its investment in S.
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Eg 1 Workings
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Eg 1- Workings Analysis of equity of S
At acquisition
Pro-forma consolidating j/e
21
(a) (b) (c)
SC 20 20 20
RE 10 10 10
30 30 30
Inv in S 30 45 25
- 15 (5)GW BPO
Dr Cr Dr Cr Dr Cr
SC 20 20 20RE 10 10 10
GW 15
Inv in S 30 45 25
Gain 5
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Eg 1 - Solution
P & S GROUPCONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 20x1
(a) (b) (c)
Other assets (120 + 30) / (105 + 30) / (125 + 30) 150 135 155
Goodwill [15 (Dr GW)] 15
150 150 155Share capital [100 + 20 – 20 (Dr SC)] 100 100 100
Retainedearnings
(a) / (b) [50 + 10 -10 (Dr RE)](c) [50 + 10 -10 (Dr RE) + 5 (Cr Gain)]
50 50 55
150 150 155
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Principles learnt
On consolidated SOFP,
Group share capital is the share capital of P only Group RE is
RE of P, plus
RE of S
Post acquisition (thus eliminate at acquisition)
Investment in S (from P’s TB) does not appear
Other assets and liabilities of P and S are summedtogether
The consolidation adjustments are not recorded inthe records of P or S
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Change in value of non depreciable
assets of subsidiary
An arms-length transaction involving the transfer ofownership of shares in a subsidiary may be a reliableindicator of major asset held by the subsidiary
Adjustments are made to identifiable tangible assets
on the basis of specific information regarding the valuation of those assets
implied information by examining the SOFP of thesubsidiary
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Eg 2 - Consolidation at acquisition: Excess
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Eg 2 Consolidation at acquisition: Excessattributable to non-depreciable asset
S plcSTATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 20X1Land 2
Other assets
30
Share capital 20Retained earnings 10
30
25
P plcSTATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 20X1(a) (b) (c)
Other assets 120 105 125
Investment in S 30 45 25
150 150 150
Share capital 100 100 100Retained earnings 50 50 50
150 150 150
On 31 December 20X1 P Limited acquired 100% of the ordinary share capital of S plc for(a) £30, when FV of land is £25(b) £45, when FV of land is £37(c) £25, when FV of land is £20Required: Prepare a consolidated SOFP at 31 December 20X1.Ignore tax
Eg 2 - Workings
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Eg 2 Workings Analysis of equity of S
At acquisition
Pro-forma consolidating j/e
26
(a) (b) (c)
SC 20 20 20
RE 10 10 10
Land (37 – 25) / (20 – 25) 12 (5)
30 42 25
Inv in S 30 45 25
- 3 -GW
Dr Cr Dr Cr Dr Cr
SC 20 20 20
RE 10 10 10
Land 12 5
GW 3
Inv in S 30 45 25
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Eg 2 - Solution
P & S GROUPCONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 20x1
(a) (b) (c)
Land (25) / [25 + 12 (Dr Land)] / [25 – 5 (Cr Land)] 25 37 20
Goodwill [3 (Dr GW)] 3
Other assets (120 + 5) / (105 + 5) / (125 + 5) 125 110 130
150 150 150
Share capital [100 + 20 – 20 (Dr SC)] 100 100 100
Retainedearnings
[50 + 10 -10 (Dr RE)] 50 50 50
150 150 150
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Principles learnt
The change in the fair value of the land
has not been recorded in the financial statements of S has been recorded as a consolidation adjustment only.
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CONSOLIDATION OF WHOLLY OWNED
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CONSOLIDATION OF WHOLLY OWNED
SUBSIDIARY AFTER ACQUISITION Analyse equity of subsidiary At date of acquisition for at acquisition adjustments
to establish the fair value of the identifiable net assets ofthe subsidiary
to calculate goodwill or bargain purchase option The period between the date of acquisition and
the start of the current financial year to establishthe post-acquisition profits or losses of the subsidiaryattributable to the parent company for adjustments at
beginning of current year The current year profit of the subsidiary company
and any dividends paid for current year adjustments
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Example 3: Consolidation after acquisition
S plcSTATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 20X1
Net assets 30
30
Share capital 20
Retained earnings 10
30
30
P plcSTATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 20X1
Net assets 150
150
Share capital 100
Retained earnings 50
150
On 1 January 20X2 P Limited acquired 100% of the share capital of
S Limited for £30.
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Example 3: Consolidation after acquisition . .
TRIAL BALANCES 31/12/20x3 31/12/20x2
P S P S
Net assets 220 47 160 35
Investment in S 30 - 30 -
250 47 190 35
Share capital 100 20 100 20
Retained earnings – boy 90 15 50 10
Profit for period 60 12 40 5
250 47 190 35
31
Required:Prepare consolidated financial statements for 20x2 and 20x3.
Trial balances of P plc and S plc at 31 December 20x2 and 20x3 are
as follows:
Eg 3 - Workings
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g g Analysis of equity of S
32
31/12/20x3 31/12/20x2
At acquisition Pro-forma Pro-forma
SC 20 Dr 20 Dr
RE 10 Dr 10 Dr
30 30
Inv in S 30 Cr 30 Cr
- -Beginning of year
RE at boy 15 (31/12/x2) 10 (31/12/x1)
RE at acquisition (10) (10)
5 -
Current year
Profit 12 5
Eg 3 Workings
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Eg 3 – Workings . . .
Pro-forma consolidating j/e
33
20x3 20x2
Dr Cr Dr Cr
At acq
SC 20 20
RE 10 10
Inv in S 30 30
Eg 3 - Solution
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g
P & S GROUPCONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER
20x3 20x2
SC RE SC RE
Bal at boy 100 95 [90 + 15 – 10 (At acq)] 100 50 [90 + 15 – 10 (At acq)]
Profit for
period
72 45
Bal at eoy 100 167 100 95
34
P & S GROUPCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER
20x3 20x2Profit for the period 72 (60 + 12) 45 (40 + 5)
Eg 3–
Solution . . .
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g
P & S GROUPCONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER
20x3 20x2
Net assets 267 (220 + 47) 195 (160 + 35)
267 195
Share capital 100 P only, or[100 + 20 – 20 (At acq)] 100 P only, or[100 + 20 – 20 (At acq)]
Retained earnings 167 From SOCIE, or[(90 + 15 – 10) + 72]
95 From SOCIE, or[(50 + 10 -10) + 45]
267 195
35
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Principles learnt
Group RE at beginning of year =P’s RE at beginning of year
plus P’s share of S’s post acquisition RE at beginning of year
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Elimination of intra group transactions
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Elimination of intra-group transactions
Eliminate in full intragroup
Assets and liabilities Income and expenses
(IFRS 10: 86(B))
37
Eg 4 - Elimination of intragroup transactionsT i l b l P S
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38
Trial balances P S Share capital 500 100Retained earnings 260 80Rent income (from S) 36 -
Admin fee income (from S) 12 -Interest income (from S) 6 -Dividend income- S 50 -Dividend income - other 97 33Loan from P - 60Current account - P - 37Gross profit 230 170
1 191 480
Land and buildings 360 -Investment in S 100 -Other investments 150 74Taxation 72 40Loan to S 60 -Current account - S 37 -Dividends paid 140 50Expenses 104 70Other assets 168 246
1 191 480
P plc acquired 100% of theshares in S plc when it was
formed, some years ago.
Required :
Prepare consolidatedfinancial statements for the20X2 financial year.
Eg 4 - Workings
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Analysis of equity of S
39
31/12/20x2
At acquisition Pro-forma
SC 100 Dr
RE 0
100
Inv in S 100 Cr
-Beginning of year
RE at boy 80
RE at acquisition (0)
80
Current yearProfit 93 (170 +33 – 70 – 40)
Dividend (50) Dr Div inc (P) Cr Div pd (S)
o nP GROUP plcCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 20x2
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E g 4 -
S ol u
t i o FOR THE YEAR ENDED 31 DECEMBER 20x2
Gross profit (230 + 170) 400
Dividends received [(97 + 33) + 50 – 50)] 130
Expenses (104 + 70 - 54) (120)Profit before tax 410
Taxation (72 + 40) (112)
Profit for the period 298
40
P GROUP plcCONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 20x2
Retainedearnings
Balance at beginning of year (260 + 80 – 0) 340
Profit for the period 298
Dividends (140 + 50 – 50) (140)
Balance at end of year 498
Pro-forma j/e Dr Cr
Rent inc 36
Admin fee inc 12
Int inc 6
Expenses 54
Pro-forma j/e Dr Cr
Dividend inc - S 50Dividends paid 50
Eg 4 – Solution . . .
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P GROUP plcCONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 20x2
ASSETS
Land & buildings (360 + 0) 360
Other investments (150 + 74) 224
Other assets (168 + 246) 414
998
EQUITY
Share capital (500 + 100 – 100) 500
Retained earnings (From SOCIE) 498
998
Pro-forma j/e Dr Cr
Loan from P 60
Current a/c – P 37Loan to S 60
Current a/c – S 37
Change in value of depreciable asset
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Change in value of depreciable asset
When a depreciable asset of the subsidiary is revalued by theparent company at acquisition it is necessary for the parent company to assess the remaining
useful life of the asset, and
depreciate the asset in the consolidated financial statements basedon this estimate.
The subsidiary generally does not change the asset’s value in itsrecords. Thus, the depreciation charge of the subsidiary will need to be adjusted
by the difference between the group’s depreciation charge and thatof the subsidiary.
As the consolidation journal entries are merely proforma entries
and do not get posted to a ledger, it is necessary to adjust theretained earnings and the accumulated depreciation account of thesubsidiary each year for the cumulative difference to date.
42
Eg 5 - Consolidation after acquisition: Excessb bl d bl
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attributable to depreciable assetS plcSTATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 20X1Plant 40
At cost 80
Accumulated depreciation (40)
Other net assets 110
150
Share capital 100
Retained earnings 50
150
43
P plcSTATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 20X1Net assets 480
480
Share capital 300
Retained earnings 180
480
On 1 January 20X2, P plc acquired 100% of the share capital of S plc. Plant wasconsidered to have a fair value of £60 at the date of acquisition. The estimated
future life was agreed to be five years.
Eg 5 . . . Trial balances of P plc and S plc at 31 December 20x2 and 20x3 are
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Trial balances 31/12/20x3 31/12/20x2
P S P S Share capital 300 100 300 100
Retained earnings beginning of year 184 68 160 50
Profit before depreciation and tax 60 48 40 38
Plant, accumulated depreciation - 56 - 48
544 272 500 236Plant, cost - 80 - 80
Depreciation - 8 - 8
Taxation 24 16 16 12
Investment in S plc 170 - 170 -
Other net assets 350 168 314 136544 272 500 236
44
Trial balances of P plc and S plc at 31 December 20x2 and 20x3 areas follows:
Required:Prepare consolidated financial statements for 20x2 and 20x3.
n g s
Analysis of plant S Ltd Consolidatedadjustment Group
Cost 80
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E g 5 - W
o r k i n Cost 80
31/12/X1 Accumulated depreciation (40)
01/01/X2 Carrying amount 40 /5 yr= 8
20 /5 yr= 4
60 /5 yr= 12
31/12/X2 Depreciation (8) (4) (12)
32 16 48
31/12/X3 Depreciation (8) (4) (12)
24 12 36
31/12/X4 Depreciation (8) (4) (12)16 8 24
31/12/X5 Depreciation (8) (4) (12)
8 4 12
31/12/X6 Depreciation (8) (4) (12)
0 0 0
45
31/12/20x3 31/12/20x2
At acquisition Pro-forma Pro-forma• Analysisof equity
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E g 5
– W o r k i n g s
46
SC 100 Dr 100 Dr
RE 50 Dr 50 Dr
Plant 20 Dr 20 Dr
170 170
Inv in S 170 Cr 170 Cr
- -
Beginning of year
RE at boy 68 (31/12/x2) 50 (31/12/x1)
RE at acquisition (50) (50)
Group depreciation (4) (x2 deprn)Dr RE Cr Acc deprn
-
14 0
Current year
Profit 24 (48 – 4 – 16) 18 (38 – 8 – 12)
Group depreciation (4) Dr Deprn Cr Acc Deprn (4) Dr Deprn Cr Acc Deprn
20 14
of equityof S
Eg 5 - Solution
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P & S GROUPCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER20x3 20x2
Profit before tax 96 (60 + 48 – 8 – 4 (CY Deprn)] 66 [40 + 38 – 8 -4 (CY Deprn)]
Taxation (40) (24 + 16) (28) (16 + 12)
Profit for the period 56 38
Pro-forma j/e – 20x2 Dr Cr
Depreciation expense 4
Accumulated depreciation 4
Pro-forma j/e – 20x3 Dr Cr
Depreciation expense 4
Accumulated depreciation 4
n . . .
P & S GROUPCONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 20x2
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E g 5 – S o l u t i o n
48
FOR THE YEAR ENDED 31 DECEMBER 20x2
Sharecapital
Retainedearnings
Balance at 31/12/x1 300 160 [160 + 50 – 50 (At acq)]
Profit for the period - 38
Balance at 31/12/x2 300 198
Pro-forma j/e – 20x3 Dr Cr
Retained earnings 4
Accumulated depreciation 4
P & S GROUPCONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 20x3Sharecapital
Retainedearnings
Balance at 31/12/x2 300 198 [184 + 68 – 50 (At acq) – 4 (Boy Acc dep)]
Profit for the period - 56
Balance at 31/12/x3 300 254
n . . .
P & S GROUP plcCONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER
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E g 5 – S o l u t i o n 3
20x3 20x2
ASSETS
Plant 36 48 At cost 60 (80 – 40 + 20) 60 (80 – 40 + 20)
Accumulated depreciation (24) (56 – 40 + 4 + 4) (12) (48 – 40 + 4)
Other net assets 518 (350 + 168) 450 (314 + 136)
554 498
EQUITY AND LIABILITIES
Share capital 300 (P only) 300 (P only)
Retained earnings 254 (from SOCIE) 198 (from SOCIE)
554 498
49
Pro-forma j/e Dr Cr
Dep exp 4
Acc Dep 4
Pro-forma j/e–
x2 and x3 Dr Cr
Accumulated depreciation 40
Plant 40Pro-forma j/e Dr Cr
RE 4
Acc Dep 4
PARTLY OWNED SUBSIDIARIES
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When a subsidiary is not ownedentirely by a parent company (or by
subsidiaries of the parent), theshareholders outside the group areknown as the non-controllinginterests (referred to in previous
versions of the standard as minority
shareholders or outside shareholders) The NCI are shareholders of the
subsidiary and have no interest in theconsolidated financial statements
Non-controlling interest defined as
equity of subsidiary not attributable,directly or indirectly, to a parent
(IFRS 10, Defns)
50
P
S
NCI
Goodwill definition (taking intolli i )
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account non-controlling interests)
GW is defined in IFRS 3 as the excess of
the acquisition date fair value of the consideration transferredand
the amount of any non-controlling interest in theacquiree
over
the acquisition date fair value of the net amount ofidentifiable assets acquired and liabilities assumed.
51
Effect on consolidated SOFP
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52
Effect on consolidated SOFP
The parent / subsidiary company relationship results inthe parent company controlling the economicresources of the subsidiary
Thus, full carrying amounts (not only P’s share) ofthe A and L of S are included on the consolidated SOFP
of the group The portion of S’s net assets owned by the non-
controlling interests are shown as ‘non-controllinginterests’ on the group SOFP within equity,
separately from the equity of the parent.(IFRS 10:22)
Effect on consolidated SOCI
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53
Effect on consolidated SOCI
The parent / subsidiary company relationship gives the
parent company the power to govern the financial andoperating policies of the subsidiary
Thus, the subsidiary’s I and E items are included in full on the consolidated SOCI of the group.
The profit and TCI of the group is then allocatedbetween Equity holders / owners of the parent
Non-controlling interests
as a reconciliation at the bottom of the group SOCI.(IFRS 10: B94)
Eg 1- Consolidation at acquisition: GoodwillS plcP plc
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S plcSTATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 20X1
Other assets 30
30
Share capital (20 shares of £1) 20
Retained earnings 10
30
54
P plcSTATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 20X1
(a) (b) (c)
Other assets 126 110 130
Investment in S 24 40 20
150 150 150
Share capital 100 100 100
Retained earnings 50 50 50
150 150 150
On 31 December 20X1 P Limited acquired 80% of the ordinary share capital of S plc for(a) £24(b) £40(c) £20
The other assets of S plc consist of inventory and accounts receivable which are considered to befairly valued.Required: Prepare a consolidated SOFP at 31 December 20X1.
Eg 1- Workings
A l i f i f S
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Analysis of equity of S
55
(a) (b) (c)
At acquisition TotNCI
(20%)P
(80%) TotNCI
(20%)P
(80%) TotNCI
(20%)P
(80%
SC 20 20 20
RE 10 10 10
30 6 24 30 6 24 30 6 24
Goodwill calculation
FV of consideration 24 40 20
NCI 6 6 6
30 46 26
FV of net assets 30 30 30
- 16 (4)
GW Gain fromBPO
Eg 1- Workings
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Pro-forma consolidating j/e
56
(a) (b) (c)Dr Cr Dr Cr Dr Cr
SC 20 20 20
RE 10 10 10
GW 16
NCI 6 6 6
Inv in S 24 40 20
Gain 4
Eg 1 - Solution
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P & S GROUPCONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 20x1(a) (b) (c)
Other assets (126 + 30) / (110 + 30) / (130 + 30) 156 140 160
Goodwill [16 (Dr GW)] 16
156 156 160
Share capital [100 + 20 – 20 (Dr SC)] 100 100 100
Retainedearnings
(a) / (b) [50 + 10 -10 (Dr RE)](c) [50 + 10 -10 (Dr RE) + 4 (Cr Gain)]
50 50 54
NCI 6 6 6
156 156 160
57
CONSOLIDATION OF PARTLY OWNEDSUBSIDIARY AFTER ACQUISITION
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SUBSIDIARY AFTER ACQUISITION Income and expenses of S included in consolidated
SOCI from acquisition date Non-controlling interests in profit or loss of S are
Identified
Disclosed separately from profit or lossattributable to P
58
Example 2: Consolidation after acquisition On 1 January 20x1, P plc acquired 75% of the shares in S plc for
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TRIAL BALANCES 31/12/20x2 31/12/20x1P S P S
Net assets 58,5 40 48 36
Investment in S 24 - 24 -
Dividends paid 12 6 10 4
94,5 46 82 40
Share capital 50 20 50 20
Retained earnings – boy 22 16 15 12
Profit for period 18 10 14 8
Dividend income 4,5 - 3 -94,5 46 82 40
59
Required: Prepare consolidated financial statementsfor 20x1 and 20x2.
£24 000. Trial balances of P plc and S plc at 31 December 20x1 and20x2 are as follows:
n g s Analysis of equity of S
31/12/20x2 31/12/20x1
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E g 2 - W
o r k i
60
31/12/20x2 31/12/20x1
Tot
Pro- forma
NCI(25%)
P(75%) Tot
Pro- forma
NCI(25%)
P(75%)
At acquisition
SC 20 Dr SC 20 Dr SC
RE 12 Dr RE 12 Dr RE
32 8 24 32 8 24
Cr NCI(SOFP)
Cr Inv Cr NCI(SOFP)
Cr Inv
Beginning of year
RE at boy 16 12
RE at acquisition(12) (12)4 1 3 0
Dr RECr NCI(SOFP)
i n g s Analysis of equity of S . . .
31/12/20x2 31/12/20x1
Pro NCI P Pro NCI P
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E g 2 - W
o r k i
61
Tot
Pro- forma
NCI(25%)
P(75%) Tot
Pro- forma
NCI(25%)
P(75%)
Current yearProfit 10 2,5 7,5 8 2 6
Dr NCI(SOCI)Cr NCI(SOFP)
Dr NCI(SOCI)Cr NCI(SOFP)
Dividend paid (6) (1,5) (4,5) (4) (1) (3)
CrDiv pd
(S)
Dr NCI
(SOFP)
DrDiv inc
(P)
CrDiv pd
(S)
Dr NCI
(SOFP)
DrDiv inc
(P)
40 10 30 36 9 21
(40 x25%)
(36 x25%)
Summary of pro-forma consolidating entries
20x2 Dr Cr
At acquisition
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62
At acquisition
SC 20
RE 12
NCI (SOFP) 8
Inv in S 24
Beginning of year
RE 1
NCI (SOFP) 1
Current year
NCI (SOCI) 2,5
NCI (SOFP) 2,5
Div inc (P) 6
NCI (SOFP) 1,5
Div pd (S) 4,5
Eg 2 - SolutionP & S GROUP
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P & S GROUPCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
20X2 20X1
Profit for the period 28 (18 + 10) 22 (14 + 8)
Other comprehensive income - -
Total comprehensive income 28 22
Attributable to:
Equity holders of parent 25,5 (28 – 2,5) or(18 + 7,5) 20 (22 – 2) or (14 + 6)
Non-controlling interests 2,5 Dr NCI (SOCI) 2 Dr NCI (SOCI)
28 22
63
Eg 2 – solution . . .
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P & S GROUPCONSOLIDATED STATEMENT OF CHANGES IN EQUITY
SC RE Attributableto P NCI Tot
Bal 01/01/x1 50 15 (15 + 12 – 12) 65 - 65
Acq of S 8 At acq
TCI 20 (From SOCI) 20 2 CY 22
Dividends (10) P only, or (10 + 4 – 4) (10) (1) CY (11)Bal31/12/x1
50 25 [22 + 16 – 12 (at acq) – 1 (NCI boy)]
75 9 84
TCI 25,5 (From SOCI) 25,5 2,5 CY 28
Dividends (12) P only, or (12 + 6 – 6) (12) (1,5) CY (13,5)
Bal 31/12/x2 50 38,5 88,5 10 98,5
64
Eg 2 –
solution . . . P & S GROUP
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P & S GROUPCONSOLIDATED STATEMENT OF FINANCIAL POSITION
20X2 20X1
ASSETS
Net assets (58,5 + 40) (48 + 36) 98,5 84
98,5 84
EQUITY AND LIABILITIES
Equity
Share capital 50 50
Retained earnings 38,5 25
Equity attributable to equity holders of parent 88,5 75
Non-controlling interest 10 9
98,5 84
65
Consolidation after acquisition- principles learnt
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66
principles learnt The non-controlling interest’s share of the post
acquisition RE of S, to the beginning of the year , is
allocated by a consolidating adjustmentDr RECr Non-controlling interest (SOFP)
The non-controlling interest’s share of profits for thecurrent year is allocated by a consolidating adjustment
Dr Non-controlling interest (SOCI)Cr Non-controlling interest (SOFP)
The dividends paid of S is eliminated against thedividend income of P and the non-controlling interest(SOFP)
Dr Dividend income (P)Dr NCI (SOFP)Cr Dividend paid (S)
Elimination of intra-group transactions
l l l d b d
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Same principles apply to partly owned subsidiaries asto wholly owned subsidiaries
Eliminate in full intragroup Assets and liabilities
Income and expenses(IFRS 10: 86(B))
However, non-controlling interests’ share of profit iscalculated before eliminating the intra-grouptransactions
Intra-group transactions are eliminated whencomputing group profit.
67
Eg 3 - Elimination of intra-group transactionsTrial balances – 31/12/x2 P S
Share capital 500 100d
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68
Retained earnings 260 80Rent income (from S) 36 - Admin fee income (from S) 12 -
Interest income (from S) 6 -Dividend income- S 40 -Dividend income - other 97 35Loan from P - 58Current account - P - 37Gross profit 230 170
1 181 480Land and buildings 380 -Investment in S 80 -Other investments 150 74Taxation 72 40Loan to S 58 -
Current account - S 37 -Dividends paid 140 50Expenses 104 70Other assets 160 246
1 181 480
P plc acquired 80% of theshares in S plc when it was
formed, some years ago.
Required :Prepare consolidated
financial statements for the20x2 financial year.
k i n g s • Analysis of equity of S 31/12/20x2
Tot
NCI(20%)
P(80%)
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E g 3 - W
o r k
69
Tot
At acquisition
SC100
RE 0
100 20 80
Goodwill calculation
FV of consideration 80
NCI 20
100
FV of net assets 100
-
Beginning of year
RE at boy 80
RE at acquisition (0)
80 16 64
Pro-forma j/e Dr Cr
At acquisition
SC 100
RE 0
NCI (SOFP) 20
Inv in S 80Beginning of year
RE 16
NCI (SOFP) 16
k i n g s
• Analysis of equity of S . . . 31/12/20x2
NCI( %)
P(8 %)
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E g 3 - W
o r k
70
Tot (20%) (80%)
Current year
Trading profit 170
Dividend income 35
Expenses (including intra-group) (70)
Tax (40)
95 19 76
Dividend paid (50) (10) (40)
225 45 180
(225 x20%)
Pro-forma j/e Dr Cr
Current year
NCI (SOCI) 19
NCI (SOFP) 19
Div inc (P) 40
NCI (SOFP) 10
Div pd (S) 50
Eg 3 - SolutionP GROUP plcCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 20x2
Gross profit (230 + 170) 400
Dividends received [(97 + 35) + 40 – 40)] 132
Expenses (104 + 70 - 54) (120)
Profit before tax 412
Taxation (72 + 40) (112)
Profit for the period 300
Attributable to
Equity holders of parent (300 – 19) 281
Non-controlling interest 19
300
71
Pro-forma j/e Dr Cr
Rent inc 36
Admin fee inc 12
Int inc 6
Expenses 54
Eg 3 –
Solution . . .
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72
P GROUP plcCONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 20x2Share
capitalRetainedearnings
Attrib-utable
to PNCI Total
Balance 01/01/x2 500 324 [260 + 80 - 0– 16 (NCI boy)]
824 36 [20 (at acq)+ 16 (boy)]
860
Profit for the period 281 281 19 CY 300
Dividends (140) (140 + 50 – 50) (140) (10) CY (150)
Balance 31/12/x2 500 465 965 45 1 010
Eg 3 –
Solution . . .
P GROUP plcPro-forma j/e Dr Cr
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73
pCONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 20x2
ASSETS Land & buildings (380 + 0) 380
Other investments (150 + 74) 224
Other assets (160 + 246) 406
1 010
EQUITY
Share capital (500 + 100 – 100) 500
Retained earnings (From SOCIE) 465
Equity attributable to equity holders of parent 965
Non-controlling interest 451 010
Pro forma j/e Dr Cr
Loan from P 58
Current a/c – P 37
Loan to S 58
Current a/c – S 37
Change in value of depreciable assets
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74
Same principles apply to partly owned subsidiaries
as to wholly owned subsidiaries Pro-forma consolidating entries for cumulative
group depreciation to beginning of year is takeninto account before allocating ‘RE to boy’ to non-
controlling interests Pro-forma group adjustments for current year
group depreciation is taken into account before allocating current year profit to non-controllinginterests
Eg 4On 1 March 20X5, P plc acquired 80% of the share capital of S plc. Plant was consideredto have a fair value of £45,5 at the date of acquisition. S plc had acquired the plant on1 March 20x4 Estimated total useful life is 8 years and P plc agreed with this estimate
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Trial balances 28/02/20x7 28/02/20x6
P S P S
Share capital 100 000 40 000 100 000 40 000
Retained earnings beginning of year 45 760 11 000 26 560 5 000
Profit before depreciation and tax 42 000 20 000 32 000 16 000
Plant, accumulated depreciation - 18 000 - 12 000
187 760 89 000 158 560 73 000
Plant, cost - 48 000 - 48 000
Investment in S plc 38 800 - 38 800 -
Other net assets 132 160 29 400 106 960 15 000
Taxation 16 800 5 600 12 800 4 000
Depreciation - 6 000 - 6 000
187 760 89 000 158 560 73 000
75
Required:Prepare consolidated financial statements for 20x6 and 20x7.
1 March 20x4. Estimated total useful life is 8 years and P plc agreed with this estimate.
Eg 4 - Workings
S L dConsolidated
G
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Analysis of plant S LtdConsolidatedadjustment
Group
01/03/x4 Cost 48
28/02/x5 Accumulated depreciation (6)
Carrying amount 42 /7 yr= 6
3,5 /7 yr= 0,5
45,5 /7 yr= 6,5
28/02/x6 Depreciation (6) (0,5) (6,5)
36 3 39
28/02/x7 Depreciation (6) (0,5) (6,5)30 2,5 32,5
01/03/x7 – 28/02/x12
Depreciation for remaining5 years
(30) (2,5) (32,5)
0 0 0
76
Eg 4 –
Workings Analysis of equityof S 28/02/x7 28/02/x6
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77
At acquisition TotNCI
(20%)P
(80%) Pro-forma TotNCI
(20%)P
(80%) Pro-forma
SC Dr SC 40 Dr SC
RE Dr RE 5 Dr RE
Plant Dr Plant 3,5 Dr Plant
48,5 9,7 38,8
Cr NCI Cr Inv in S Cr NCI Cr Inv in S
Beginning of year
RE at boy 5
RE at acquisition (5)
Group depreciation Dr RECr Acc dep
-
0
Dr RE
28/02/x7 28/02/x6
Eg 4 –Workings . . .
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78
/ / 7 / /
Current year Tot NCI P Pro-forma Tot NCI P Pro-forma
Profit 6
Group depreciation Dr DepCr Acc Dep
(0.5) Dr DepCr Acc Dep
5,5 1,1 4,4
Dr NCI (CI)
Cr NCI (FP)
Dr NCI (CI)
Cr NCI (FP)54 10.8
= 20% = 20%
Eg 4 - Solution
P & S GROUP
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79
P & S GROUPCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 28 FEBRUARY20x7 20x6
Profit before tax [ (CY Deprn)] 41,5 [32 + 16 – 6 - 0,5 (CY Deprn)]
Taxation ( ) ( ) (16,8) (12,8 + 4)
Profit for the period 24,7
Pro-forma j/e – 20x2 Dr Cr
Depreciation expense 0,5
Accumulated depreciation 0,5
Pro-forma j/e – 20x3 Dr Cr
Depreciation expense
Accumulated depreciation
t i o n . .
. P & S GROUPCONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 28 FEBRUARY 20X6
Sharecapital
Retainedearnings
Attribto P NCI Tot
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E g 4 – S
o l u t
80
capital g to P NCI Tot
Balance at 01/03/x5 100 26,56 (26,56 + 5 – 5) 126,56 - 126,56
Acquisition of sub 9,7Profit for the period 23,6 23,6 1,1 24,7
Balance at 28/02/x6 100 50,16 150,16 10,8 160,96
Pro-forma j/e – 20x7 Dr Cr
Retained earnings
Accumulated depreciation
P & S GROUPCONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 28 FEBRUARY 20X7
Sharecapital
Retainedearnings
Attribto P NCI Tot
Balance at 28/02/x6 ( ) ( )
Profit for the period
Balance at 38/02/x7
t i o n . .
. P & S GROUP plcCONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 28 FEBRUARY
20X7 20X6
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E g 4 –
S o l u ASSETS
Plant 39
At cost ( ) 45,5 (48 – 6+ 3,5)
Accumulated depreciation ( ) (6,5) (18 – 6 + 0,5)
Other net assets 121,96
160,96
EQUITY AND LIABILITIESShare capital (P only) 100 (P only)
Retained earnings (from SOCIE) 50,16 (from SOCIE)
Attributable to P 150,16
Non-controlling interests 10,8
160,96
81
INTRA-GROUP TRADING
If t ll d t
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If a parent company sells goods to asubsidiary company
The GP of the parent is realised andrecognised in the parent’s financialstatements
The GP of the group
Remains unrealised if the goods are unsold by thesubsidiary
Becomes realised once the goods are sold by thesubsidiary (to customers outside the group)
No implication for the NCI as the NCI haveno share in the profit of the parent
82
INTRA-GROUP TRADING . . . If a subsidiary company sells goods to a parent
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If a subsidiary company sells goods to a parentcompany The GP of the subsidiary is realised and recognised in the
subsidiary’s financial statements
The GP of the group Remains unrealised if the goods are unsold by the parent
Becomes realised once the goods are sold by the parent(tocustomers outside the group)
Implication for the NCI as the NCI have a share in theprofit of the subsidiary Any unrealised profit of the subsidiary (in the parent’s
inventory) must be eliminated before computing the NCIshare of profit
83
a d i n g –
s i d i a r y
TRIAL BALANCES 31/12/20x5
P S
On 1 January 20x3, P plc acquired 80% of the shares in S plc for£48. Trial balances of P plc and S plc at 31 December 20x5 are asfollows:
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E x a m p l e 1 : I n
t r a - g r o u p
t r a
p a r e n t s e l l s g
o o d s t o s u b s P S
Investment in S 48
Other net assets 106 77
Inventory 30 20
Tax expense 6 3
190 100
Share capital 100 50Retained earnings – boy 70 40
Profit before tax 20 10
190 100
84
Included in the closing inventory of S plc are goods bought from P plc for £3. The cost of these goods to P plc is £2.
Required:Prepare consolidated SOCI and SOFP for 20x5.
r k i n g s
e q u i t y o f
S 31/12/20x5
TotPro- forma
NCI(20%)
P(80%)
At acquisition
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E g 1 - W
o r
A n a l y s i s
o f e
85
SC 50 Dr SC
RE 10 Dr RE
60 12 48
Cr NCI(SOFP)
Cr Inv
Beginning of year
RE at boy 40RE at acquisition (10)
30 6 24
Dr RECr NCI (SOFP)
Current year
Profit after tax 7 1,4 5,6
97 19,4
Noimplication to
NCI of P’sunrealised
profit
u t i o n
P & S GROUP
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 20X5
Profit before tax 29 [(20 – 1) + 10)
Tax expense (9) (6 + 3)
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E g 1 - S o l u Profit for the period 20
86
Pro-forma j/e–
20x5 Dr CrProfit before tax 1
Inventory 1
P & S GROUPCONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 20X5 ASSETS
Other net assets (106 + 77) 183
Inventory [(30 -1) + 20] 49
232
EQUITY AND LIABILITIES
Share capital 100Retained earnings [P (70 + 14 -1)] + [S (30 x 0,80) + (7 x 0,80)] 112,6
Equity attributable to equity holders of parent 212,6
Non-controlling interest [(60 + 30 + 7) x 0,20] 19,4
232
r a d i n g –
p a r e n t
TRIAL BALANCES 31/12/20x5
P S
On 1 January 20x3, P plc acquired 80% of the shares in S plc for£48. Trial balances of P plc and S plc at 31 December 20x5 are asfollows:
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E x a m p l e 2 : I n
t r a - g r o u p t r
s u b s i d i a r y s e l l s g o o d s
t o p P S
Investment in S 48
Other net assets 106 77
Inventory 30 20
Tax expense 6 3
190 100
Share capital 100 50Retained earnings – boy 70 40
Profit before tax 20 10
190 100
87
Included in the closing inventory of P plc are goods bought from S plc for £3. The cost of these goods to S plc is £2.
Required:Prepare consolidated SOCI and SOFP for 20x5.
r k i n g s
e q u i t y o f
S 31/12/20x5
Tot Pro-forma NCI (20%) P (80%)
At acquisition
SC 50 Dr SC
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E g 2 - W
o r
A n a l y s i s
o f e
88
5
RE 10 Dr RE
60 12 48Cr NCI (SOFP) Cr Inv
Beginning of year
RE at boy 40
RE at acquisition (10)30 6 24
Dr RE Cr NCI (SOFP)
Current year
Profit after tax 7
S unrealised profit (1)
6 1,2 4,8
96 19,2
The NCImust share
in theunrealisedprofit of S
u t i o n
P & S GROUP
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 20X5
Profit before tax 29 [20 + (10 – 1)]
Tax expense (9) (6 + 3)
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E g 2 - S o l u Profit for the period 20
89
Pro-forma j/e–
20x5 Dr CrProfit before tax 1
Inventory 1
P & S GROUPCONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 20X5 ASSETS
Other net assets (106 + 77) 183
Inventory [30 + (20 – 1)] 49
232
EQUITY AND LIABILITIES
Share capital 100Retained earnings [P 70 + 14 ] + [S (30 x 0,80) + (6 x 0,80)] 112,8
Equity attributable to equity holders of parent 212,6
Non-controlling interest [(60 + 30 + 6) x 0,20] 19,2
232
ACQUISITION OF SUBSIDIARY PARTWAY THROUGH THE YEAR
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The ‘at acquisition’ reserves of the subsidiary are an
important number Used as part of the calculation of the FV of the equity of the
subsidiary at acquisition for the purposes of computinggoodwill / BPO
Only reserves earned by the subsidiary post-acquisition arerecognised as earned by the group.
If the subsidiary is acquired part way through the year, it isnecessary to calculate the reserves at acquisition Retained earnings at last SOFP date
profits earned until acquisition date- dividends paid until acquisition date
90
o n of
h r o u g h On 1 April 20x1, P plc acquired 75% of the shares in S plc for
£24 000. Profit of S is earned evenly through the year. Trialbalances of P plc and S plc at 31 December 20x1 are as follows:
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E x a
m pl e
1 : A c q u i s i t i o
s u b
s i d i a r y p a r t w a y
t h
t h e
y e a r
TRIAL BALANCES 31/12/20x1
P SNet assets 46,5 36
Investment in S 25,5 -
Dividends paid 10 4
82 40
Share capital 50 20
Retained earnings – boy 15 12
Profit for period 14 8
Dividend income 3 -
82 40
91
Required: Prepare consolidated SOFP at 31/12/x1
o r k i n g s
Analysis of equity of S 31/12/20x1
TotNCI
(25%)P
(75%)
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E g 1 - W
o
92
At acquisition
SC 20RE (31/12/xo) 12
Profit (01/01/x1 – 31/03/x1) (8 x 3/12) 2
34 8,5 25.5
End of year
RE at eoy (12 + 8 – 4) 16
RE at acquisition (14)
2 0,5 1,5
36 9
Eg1 –
solutionP & S GROUPCONSOLIDATED STATEMENT OF FINANCIAL POSITION
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AT 31 DECEMBER 20X1 ASSETS
Net assets (46,5 + 36) 82,5
82,5
EQUITY AND LIABILITIES
Equity
Share capital 50Retained earnings [P (15 + 14 + 3 - 10) + S (2 x 0,75)] 23,5
Equity attributable to equity holders of parent 73,5
Non-controlling interest [(34 + 2) x 0,25] 9
82,5
93
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