consolidation schedules - financial reporting

what is acquisition accounting?

• requires 100% consolidation of revenue, expenses, assets and liabilities of all group companies in the group accounts

• presents the amount of profit/loss of net assets not owned in the subsidiary companies as NCI

when do you apply acquisition accounting?

when a parent company has control over another entity

how do you adjust for unrealised profit for P→S in P&L?

• reduce revenue

• increase CoS

• reduce parent CoS by PURP

how do you adjust for unrealised profit for S→P in P&L?

• reduce revenue

• increase CoS

• reduce subsidiary CoS by PURP

how do you adjust for unrealised profit for P→S in SFP?

• remove PURP from inventories

• remove PURP from RE

how do you adjust for unrealised profit for S→P in SFP?

• remove PURP from inventories

• remove PURP from net assets at reporting date

what is an associate?

has a holding of > 20% but < 50%

what is equity accounting?

• requires only the investors share in the investor’s profit/loss and net assets to be in consolidated group accounts

• only appropriate to apply EA when the investor has a significant influence or joint control over the investee

where do you put investment in associates?

presented under non-current assets in CSFPw

how do you calculate investment in associates?

investment cost + parents share of post-acquisition change in net assets

what else must you do with an associate in the CSFP?

include parents share of post-acquisition change in net assets in the retained earnings

where do you put share of profit of associate?

presented before profit before tax in CSCI

how do you calculate share of profit of associates?

associates profit after tax * parents ownership % of A

how do you adjust intra-group trading for A—>S?

• reduce retained earnings by parent share of PURP

• reduce share of profit of associates by parents share of PURP